Can Best Buy Stock Recover If Markets Fall?

Best Buy (BBY) stock is down 8.5% in 5 trading days. The recent slide reflects renewed concerns around cautious consumer spending and inflation impacting big-ticket items, but sharp drops like this often raise a tougher question: is the weakness temporary, or a sign of deeper cracks in the story?

Before judging its downturn reslience, let’s look at where Best Buy stands today.

• Size: Best Buy is a $16 Bil company with $42 Bil in revenue currently trading at $74.06.
• Fundamentals: Last 12 month revenue growth of -2.2% and operating margin of 4.1%.
• Liquidity: Has Debt to Equity ratio of 0.29 and Cash to Assets ratio of 0.1
• Valuation: Best Buy stock is currently trading at P/E multiple of 18.2 and P/EBIT multiple of 12.9
• Has returned (median) 84.5% within a year following sharp dips since 2010. See BBY Dip Buy Analysis.

These metrics point to a Weak operational performance, alongside Low valuation – making the stock Fairly Priced. For details, see Buy or Sell BBY Stock

That brings us to the key consideration for investors worried about this fall: how resilient is BBY stock if markets turn south? This is where our downturn resilience framework comes in. Suppose BBY stock falls another 20-30% to $52 – can investors comfortably hold on? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and, (b) how quickly it recovered. Below, we dive deeper into each such downturn.

2022 Inflation Shock

• BBY stock fell 54.5% from a high of $138.00 on 22 November 2021 to $62.85 on 20 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $103.30 on 30 September 2024 , and currently trades at $74.06

 
2020 Covid Pandemic

• BBY stock fell 44.9% from a high of $91.93 on 20 February 2020 to $50.69 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 22 July 2020

 
2018 Correction

• BBY stock fell 41.6% from a high of $82.60 on 23 August 2018 to $48.24 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 10 December 2019

 
2008 Global Financial Crisis

• BBY stock fell 67.4% from a high of $53.38 on 26 December 2007 to $17.42 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 25 May 2017

 
Feeling jittery about BBY stock? Consider portfolio approach.

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