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Best Buy (BBY) Outpaces Stock Market Gains: What You Should Know

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Best Buy (BBY - Free Report) closed the most recent trading day at $104.22, moving +1.43% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.27%. At the same time, the Dow added 1.31%, and the tech-heavy Nasdaq lost 0.39%.

Coming into today, shares of the consumer electronics retailer had gained 21.13% in the past month. In that same time, the Retail-Wholesale sector gained 6.97%, while the S&P 500 gained 6.66%.

Wall Street will be looking for positivity from BBY as it approaches its next earnings report date. This is expected to be August 25, 2020. On that day, BBY is projected to report earnings of $0.98 per share, which would represent a year-over-year decline of 9.26%. Meanwhile, our latest consensus estimate is calling for revenue of $9.67 billion, up 1.39% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.57 per share and revenue of $43.60 billion. These totals would mark changes of -8.24% and -0.09%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for BBY. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 10.86% higher. BBY is currently sporting a Zacks Rank of #2 (Buy).

Looking at its valuation, BBY is holding a Forward P/E ratio of 18.47. Its industry sports an average Forward P/E of 17.49, so we one might conclude that BBY is trading at a premium comparatively.

Investors should also note that BBY has a PEG ratio of 2.26 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Retail - Consumer Electronics stocks are, on average, holding a PEG ratio of 1.61 based on yesterday's closing prices.

The Retail - Consumer Electronics industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 28, which puts it in the top 12% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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