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Best Buy operates in an unusual place among pandemic earners. Whereas companies such as Microsoft and Salesforce saw massive boosts in revenue due to corporations’ needs, Best Buy’s influx largely came from everyone struggling to work and play at home.
Stay-at-home trends such as cooking and learning boosted the company’s Q2 earnings well beyond most predictions, with online sales up 242% compared to 2019. Furthermore, when colleges and public schools announced that many classes would be held online, the company saw a massive increase in back-to-school equipment geared toward remote learning.
Computers, tablets, and small appliances led the sales charge during quarantine, while larger appliances and home theater systems rebounded when the company opened its doors. While the curbside- and online-only model restricted the company to operate at reduced capacity, Best Buy still saw the highest same-store sales growth it’s had in 2 years.
In fact, the company has done so well that it’s struggled to maintain inventory. This is due in part to the company’s reduced inventory during the pandemic, a measure taken to control costs while still serving communities. However, some of the struggle has been due to new, unexpected growth in areas such as sustainable living, home fitness, and outdoor equipment.
Despite the sudden boon, the company refused to provide a financial outlook for the remainder of 2020. Executives stated that they made this decision to account for the fact that sales – and stock prices – would fluctuate with everything from the number and size of stimulus checks to a wavering unemployment rate.
While we can’t provide the company’s financial outlook for you, Qai’s deep-learning AI (artificial intelligence) can provide a recommendation on whether now is a good time to invest in Best Buy’s stock. Without further ado, let’s dive into the numbers.
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BEST BUY CO INC (BBY)
Best Buy, Inc closed down to $111.22 on Thursday, a 0.97% dip from the day’s open on the back of 2.8 million shares. This price sits in line with the company’s 10-day price average of $112.20, though a significant increase from the 22-day price average of $106.81. Despite a short bout of stagnation in recent days, the stock is up almost 30% for the year.
The company’s revenue has grown over 3% in the last fiscal years, up to $43.64 billion compared to $42.15 billion in 2017. Operating income has seen a boost as well – almost 4.9% in the last year alone, and 16.2% since 2017. Currently, the company is operating on $2.05 billion, compared to $1.85 billion three years ago.
EPS has seen major gains over the past three years, up 89.5% since 2017, though only 7.5% of that growth has been in the last fiscal year. The company’s EPS is up to $5.75 this year compared to $3.26 in 2017. Furthermore, the company’s ROE has grown right alongside their EPS, up to 45.4% as of August.
While all of these numbers appear to bode well for the company, Best Buy is projecting a paltry forward 12-month revenue of 1.48%. They’re currently trading with a forward 12-month P/E of 15.73.
What’s the Verdict?
While Best Buy’s numbers may seem strong at first glance – at least in light of the pandemic – there are no guarantees in this economy. Furthermore, much of the company’s good fortunes were the direct result of quarantines and shutdown orders, which means that their gains have to taper off sometime – including their stock prices.
Our AI has analyzed Best Buy’s financial and technical data and determined that the company teeters the boundary between average and good. With a B in both Growth and Quality Value and a C in Technical and Momentum Volatility, Best Buy receives a Neutral rating from Qai for the month of August. Invest at your own risk – and don’t expect to see major gains in the interim (barring another pandemic, of course).
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Don’t Let Best Buy’s Financials Fool You Into Buying Stocks - Forbes
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