Is Best Buy's (BBY) Focus on Health and Store Optimization Shaping Its Long-Term Strategy?

• Best Buy reported its second quarter fiscal 2026 results, showing US$9.44 billion in sales, slightly higher than last year, but net income dropped to US$186 million, with earnings per share declining year over year.
• The company reiterated its full-year guidance and continued share buybacks while announcing plans to further optimize store count and focus on its health business.
• We’ll explore how Best Buy’s resilient revenue and updated guidance impact its outlook, especially as restructuring charges weigh on current profitability.

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Best Buy Investment Narrative Recap

To own Best Buy stock, you need to believe the company can leverage its omni-channel presence to capture demand from an upcoming technology upgrade cycle and grow in services like Best Buy Health, despite significant competitive and margin pressures. The recent quarterly results, while showing stable sales, saw earnings decline due to restructuring and higher operating costs, but these factors have not materially changed the biggest short-term catalyst, which remains new product refresh cycles, or the primary risk of margin compression from greater sales mix in lower-margin categories.

Among recent updates, Best Buy’s decision to reiterate full-year revenue guidance between US$41.1 billion and US$41.9 billion stands out. This shows management’s confidence in near-term demand catalysts, even as restructuring costs and margin pressures affect current profitability, factors that continue to influence both the company’s outlook and investor skepticism around its earnings trajectory.

By contrast, investors should be aware of a key ongoing risk: as sales growth leans toward categories like computing and gaming, margin pressure could intensify if...

Read the full narrative on Best Buy (it's free!)

Best Buy's outlook anticipates $44.5 billion in revenue and $1.5 billion in earnings by 2028. This scenario requires 2.3% annual revenue growth and a $722 million increase in earnings from the current $778 million.

Uncover how Best Buy's forecasts yield a $79.62 fair value, a 3% upside to its current price.

Exploring Other Perspectives

Six fair value estimates from the Simply Wall St Community range from US$64.62 to US$147.30, reflecting sharply differing opinions on Best Buy's intrinsic worth. With many focused on margin pressures from shifting sales mix, you might want to see how your view compares against these diverse perspectives.

Explore 6 other fair value estimates on Best Buy - why the stock might be worth as much as 90% more than the current price!

Build Your Own Best Buy Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• 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.
• Our free Best Buy research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Best Buy's overall financial health at a glance.

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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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