We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Best Buy Co., Inc. (BBY - Free Report) faces a quickly changing consumer spending environment and rising inflation. The broad-based economic tailwinds that helped Best Buy post back-to-back big years of impressive growth are coming to an end, as the housing market cools and people start spending less on big-ticket items.
Pandemic-Style Shopping Slows
Best Buy sells smartphones, TVs, connected appliances, and nearly every other consumer electronics device under the sun. Best Buy has grown even though Target (TGT - Free Report) , Walmart (WMT - Free Report) , and other giants sell similar products. The company, like everyone else, has spent years improving its digital commerce offerings.
Image Source: Zacks Investment Research
Best Buy’s core business and its e-commerce efforts helped it thrive when people began to work from home and spent big on items to fill new homes. Best Buy also benefited from stimulus checks and pandemic rebound shopping sprees. And its long-term outlook remains intact. But consumers are shifting their spending to services and other areas of retail, while also slowing big purchases amid soaring inflation and recession fears.
Best Buy’s sales climbed over 8% during 2020 (its FY21), with FY22 revenue up 9.5%. But the firm’s fourth quarter sales slipped over 3% and its first quarter FY23 revenue dipped 9% on the back changing spending habits and tough-to-compete against periods.
The electronics retailer fell short of Zacks Q1 estimates on May 24. Best Buy management lowered its guidance, with its FY23 and FY24 consensus EPS estimates down 3.3% and 3.9%, respectively.
Zacks estimates call for BBY’s revenue to slip over 5% this year, with its adjusted earnings projected to fall 13%. “Macro conditions worsened since we provided our guidance in early March… Those trends have continued into Q2 and, as a result, we are revising our sales and profitability expectations for the year,” CEO Corie Barry said in prepared remarks.
Image Source: Zacks Investment Research
Bottom Line
Best Buy’s downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) right now. The company is also part of the Consumer Electronics industry which is in the bottom 3% of over 250 Zacks industries right now. BBY shares have tumbled 31% in 2022 to lag its industry and the broader retail market.
Best Buy stock is still up 26% in the past five years to roughly match the Zacks Retail-Wholesale Market. And the fall has made its dividend yield stronger. Still, it might be best to stay away from Best Buy stock with consumer sentiment at historic lows and shoppers focused on other areas of retail, as well as services.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Bear of the Day: Best Buy Co., Inc. (BBY)
Best Buy Co., Inc. (BBY - Free Report) faces a quickly changing consumer spending environment and rising inflation. The broad-based economic tailwinds that helped Best Buy post back-to-back big years of impressive growth are coming to an end, as the housing market cools and people start spending less on big-ticket items.
Pandemic-Style Shopping Slows
Best Buy sells smartphones, TVs, connected appliances, and nearly every other consumer electronics device under the sun. Best Buy has grown even though Target (TGT - Free Report) , Walmart (WMT - Free Report) , and other giants sell similar products. The company, like everyone else, has spent years improving its digital commerce offerings.
Image Source: Zacks Investment Research
Best Buy’s core business and its e-commerce efforts helped it thrive when people began to work from home and spent big on items to fill new homes. Best Buy also benefited from stimulus checks and pandemic rebound shopping sprees. And its long-term outlook remains intact. But consumers are shifting their spending to services and other areas of retail, while also slowing big purchases amid soaring inflation and recession fears.
Best Buy’s sales climbed over 8% during 2020 (its FY21), with FY22 revenue up 9.5%. But the firm’s fourth quarter sales slipped over 3% and its first quarter FY23 revenue dipped 9% on the back changing spending habits and tough-to-compete against periods.
The electronics retailer fell short of Zacks Q1 estimates on May 24. Best Buy management lowered its guidance, with its FY23 and FY24 consensus EPS estimates down 3.3% and 3.9%, respectively.
Zacks estimates call for BBY’s revenue to slip over 5% this year, with its adjusted earnings projected to fall 13%. “Macro conditions worsened since we provided our guidance in early March… Those trends have continued into Q2 and, as a result, we are revising our sales and profitability expectations for the year,” CEO Corie Barry said in prepared remarks.
Image Source: Zacks Investment Research
Bottom Line
Best Buy’s downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) right now. The company is also part of the Consumer Electronics industry which is in the bottom 3% of over 250 Zacks industries right now. BBY shares have tumbled 31% in 2022 to lag its industry and the broader retail market.
Best Buy stock is still up 26% in the past five years to roughly match the Zacks Retail-Wholesale Market. And the fall has made its dividend yield stronger. Still, it might be best to stay away from Best Buy stock with consumer sentiment at historic lows and shoppers focused on other areas of retail, as well as services.