Best Buy (BBY): Taking Stock of Valuation After Upbeat Earnings and Management’s Strategic Overhaul

If you have been watching Best Buy (BBY) lately, it’s hard to miss the latest buzz. The company just posted quarterly results that beat Wall Street estimates, driven by renewed strength in areas like gaming consoles and AI-powered tech. Alongside this revenue growth, management chose to stick with its full-year outlook, pointing to both strategic confidence and a healthy dose of caution about how the year might unfold. With new restructuring initiatives rolling out and cost management front and center, the road ahead appears anything but dull for investors trying to figure out their next move.

So far in 2025, Best Buy’s stock has been caught in a tug-of-war between optimism and uncertainty. Shares are down 14% year-to-date, and the 1-year return sits at -24%. However, momentum shifted in the last month, with the stock jumping nearly 15% as investors reacted to upbeat earnings and management’s focus on supply chain improvements and navigating tariff risks. Recent efforts to rein in costs and the launch of a company-wide restructuring signal that Best Buy is actively retooling to keep pace with fast-changing consumer behavior, while maintaining steady execution with its quarterly dividend and buyback strategy.

After this latest rally, is Best Buy trading at a bargain with further upside, or is the market already baking in those future growth hopes?

Most Popular Narrative: 12.5% Undervalued

According to Serpentaire, the current narrative sees Best Buy as trading below fair value, hinting at modest upside potential for investors.

It’s clear that Best Buy is unlikely to outperform the market. It doesn’t offer a significant source of passive income either, with a CAGR of just 4.64% over 20 years, 5.14% over 15 years, and 9.77% over the past 10 years (dividends included). It struggles to compete with giants like Amazon and could quickly lose its position, given its lack of strong advantages or a defensible moat. Future prospects are neither revolutionary nor particularly encouraging, but the company has performed better in recent years than in the past. Time will tell where this leads.

Is the market missing something in Best Buy’s low-key turnaround story? The fair value calculation in this narrative relies on carefully chosen growth expectations and profitability assumptions. However, the real reason behind the undervaluation might surprise you. Which projections are at play, and what do they mean for the stock’s true worth? Get ready to see what’s driving these numbers.

Result: Fair Value of $84.19 (UNDERVALUED)

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

However, persistent competition from larger online retailers and shifts in consumer habits could quickly change the outlook for Best Buy’s recovery story.

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

Another View: Comparing to Industry Standards

Looking from a different angle, the company’s current market price sits above the typical earnings multiple for its industry. This suggests the stock may actually be on the expensive side. Could this indicate investors are already factoring in a turnaround?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Best Buy to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Best Buy Narrative

If you find yourself wanting a different perspective or enjoy diving into the details independently, you can craft your own view in just a few minutes. Do it your way

A great starting point for your Best Buy research is our analysis highlighting 2 key rewards and 4 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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