Back to top

Analyst Blog

Zacks Equity Research

Best Buy (BBY) Looks Promising: Stock Gains Over 29% YTD

AEO JWN BBY TLYS

Trades from $3

Investors seeking growth must add Best Buy Co., Inc. (BBY - Free Report) to their portfolio. The stock has rallied 29.4% year to date, and there is still much momentum left to cash in on. The company’s shares have also witnessed an exceptionally bullish run, when compared with major indices. The Dow Jones Industrial Average rose about 4.2%, the S&P 500 jumped approximately 4.7%, while the tech-laden NASDAQ Composite advanced roughly 4.7% year to date.

Notably, Best Buy sports a Zacks Rank #1 (Strong Buy) with a VGM Score of “A” and has a long-term expected earnings growth rate of 10.1%, which clearly speaks of the company’s inherent strength.

Best Buy appears compelling from the earnings perspective. This multinational specialty retailer of consumer electronics, home office products, entertainment software, appliances and related services has a positive earnings surprise streak in the past 15 quarters. In the trailing four quarters, this Richfield, MN-based company outperformed the Zacks Consensus Estimate by an average of 22%, including a positive surprise of 35.7% delivered in the second quarter of fiscal 2017.

Moreover, the Zacks Consensus Estimate of $3.04 and $3.19 for fiscal 2017 and fiscal 2018, has increased 18 cents and 15 cents, respectively, over the past 60 days.

Additionally, Best Buy is making extensive investments to upgrade its operations with a special focus on developing omni-channel capabilities and strengthening its partnership with vendors. Also, the company focuses on the store-in-a-store concept, which may prove to be a game changer as it facilitates the display of different brands under one roof and ensures a larger footfall.

Notably, Best Buy’s “Renew Blue” Initiative also seems to be progressing well and achieved tremendous success in fiscal 2016. Going forward, the company intends to improve annualized operating income by $400 million over the next three years and has already reached the $250 million mark.

From the above analysis, we surely believe that Best Buy is one such promising stock that must be part of your investment basket.

Stocks to Consider  

Other favorably ranked stocks in the retail sector include Tilly's, Inc. (TLYS - Free Report) , American Eagle Outfitters, Inc. (AEO - Free Report) and Nordstrom Inc. (JWN - Free Report) .

Tilly's, which has jumped over 57% in the past three months, has a long-term earnings growth rate of 15.5%. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Eagle Outfitters, a Zacks Rank #2 (Buy) stock, has a long-term earnings growth rate of 11.8%. The stock has gained roughly 10.6% year to date.

Nordstrom, with a long-term earnings growth rate of 9.7%, has surged nearly 31.7% in the past three months. It carries a Zacks Rank #2.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>