Best Buy (BBY): Exploring Valuation as New Partnerships and In-Store Experiences Expand Retail Strategy

Best Buy is making moves to stand out in the retail landscape with fresh partnerships and experiential store formats. The recent rollout of IKEA shop-in-shops and new tech offerings signals a clear shift in strategy for customer engagement.

See our latest analysis for Best Buy.

After a slow start to the year, Best Buy's share price has picked up steam recently, climbing nearly 20% over the past 90 days to $80.88. While momentum is building in the short term, the one-year total shareholder return still sits slightly in the red at -4.9%. This shows that the stock is just starting to recover from last year's weakness as the company pursues new growth initiatives.

If Best Buy’s expanding lineup has you thinking bigger, now is a great moment to broaden your investing horizons and discover fast growing stocks with high insider ownership

But with shares rebounding sharply in recent months, the big question for investors is whether Best Buy still offers hidden value or if the market is already factoring in the company’s next chapter of growth.

Most Popular Narrative: Fairly Valued

Best Buy’s current fair value estimate sits very close to the last closing price, highlighting a market closely tracking analyst expectations. This creates a scenario where small shifts in key business drivers could quickly tip the balance for investors.

"The expanding ecosystem of smart home devices and the growing adoption of connected home tech are leading to increased consumer demand for in-person advice, installation, and support. In these areas, Best Buy's omni-channel approach and Geek Squad service offering create differentiated, recurring high-margin revenue streams and increased customer loyalty, supporting long-term net margin stability."

Read the complete narrative.

Curious about the assumptions hiding in plain sight? This narrative’s valuation is driven by some bold profit and sales projections. See what numbers truly power this forecast and explore why analysts think the story could heat up from here.

Result: Fair Value of $80.71 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shifting sales toward lower-margin categories and intensified online competition remain catalysts that could materially challenge the current fair value outlook.

Find out about the key risks to this Best Buy narrative.

Another View: Discounted Cash Flow Tells a Different Story

Taking a different approach, our SWS DCF model paints Best Buy as significantly undervalued, with shares trading about 55% below its estimated fair value of $180.72. This big gap is intriguing because it questions the assumption that Best Buy’s recent recovery has already been fully valued by the market. Which perspective gets closer to reality?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Best Buy for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 840 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Best Buy Narrative

If you’re not sold on these takes or just want to dig into the numbers for yourself, you can easily run your own analysis in a matter of minutes. Do it your way

A great starting point for your Best Buy research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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