Can Best Buy’s Stock Rebound After An 18% Drop?

by Trefis Team
Best Buy
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Best Buy’s stock (NYSE: BBY) has declined by 18% in the last five trading days (one week). In comparison, the broader S&P500 index declined only marginally over the same period. The company’s stock fell despite posting a better-than-expected quarter against tough pandemic comparables in the fiscal third quarter. This was likely due to issuing a tepid sales forecast for the all-important holiday shopping season. The company’s management expects revenue of $16.4 billion to $16.9 billion, with comparable sales potentially falling as much as 2% and adjusted gross margin declining by roughly 30 basis points in the fiscal Q4.

In Q3, Best Buy’s revenue rose marginally year-over-year (y-o-y) to $11.9 billion and its adjusted earnings per share grew 1% y-o-y to $2.08. The company beat on both top and bottom line in the quarter. Further, BBY’s comparable sales in the U.S. were up 2% (compared to -1.3% consensus), and its international sales were down 3% (vs. -5.3% consensus). The retailer benefited from more people continuing to sustainably work and entertain at home during this time. While customers returned to stores, digital sales were still more than double pre-pandemic levels, and phone, chat, and in-home sales also continued to grow y-o-y.

Now, is BBY stock still poised to grow? Based on our machine learning analysis of trends in the stock price over the last ten years, there is a 61% chance of a rise in BBY stock over the next month (twenty-one trading days). See our analysis on BBY’s Stock Chance Of Rise for more details.

And if you are considering BBY’s stock as an investment option over a longer time frame, you can explore our forecast for Best Buy’s Valuation

[1] Returns of -18% or lower over five-day period in 12 times out of 2515 (0%); Stock rose in the next five days in five of these 12 instances (42%)

[2] Returns of -18% or lower over ten-day period in 38 times out of 2515 (2%); Stock rose in the next ten days in 22 of these 38 instances (58%)

[3] Returns of -8.4% or lower over twenty-one-day period in 378 times out of 2515 (15%); Stock rose in the next twenty-one days in 232 of these 378 instances (61%)

Also, Best Buy Peer Comparisons summarizes how the company fares against peers on metrics that matter.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

 Returns Nov 2021
MTD [1]
YTD [1]
Total [2]
 BBY Return -8% 11% 160%
 S&P 500 Return 1% 24% 108%
 Trefis MS Portfolio Return -2% 48% 302%

[1] Month-to-date and year-to-date as of 11/30/2021
[2] Cumulative total returns since 2017

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