Best Buy Stock Could Turn Out to Be a Pandemic Darling

Earnings for BBY are slated for release on November 24

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Consumer electronics retailer Best Buy Co., Inc. (NYSE:BBY) operates in the U.S., Canada, and Mexico. Somehow, someway, the COVID-19 pandemic may actually end up having positive long-term effects for Best Buy stock. Here's why: the work-from-home lifestyle that has emerged in response to the COVID-19 outbreak is here to stay, at least for the near-term. There will be a number of companies who stick with full-time remote employees, and that will evidently increase the average person’s need for electronics. Best Buy stock is up 29% year-to-date, and has tacked on 137% since its two-year low of $148.11 on March 19. With earnings looming, the shares could take aim at their Nov. 5 record high of $124.89. 

Best Buy will be reporting its quarterly earnings at the back-end of the month, currently slated for November 24. For the upcoming earnings report, Best Buy is expected to announce an earnings per share (EPS) of $1.62. Over the past year, Best Buy has beaten expectations on three out of four of its most recent earnings reports. Looking back to the fourth quarter of 2019, Best Buy beat earnings expectations by $0.10, reporting an EPS of $1.13. In the first quarter of 2020, Best Buy more-than-doubled its EPS quarter-over-quarter. The company beat expectations with a margin of $0.15 and reported an EPS of $2.90. Best Buy then reported a drop in EPS in the second quarter of 2020, down to $0.67. This represented a miss of $0.17. Most recently, though, Best Buy beat its quarterly earnings target by a whopping 58%. The company reported an EPS of $1.71, beating the expected EPS of just $1.08.

Best Buy stock has a forward divided of $2.20, with a dividend yield of 1.92%. The last dividend paid on BBY was for $0.55 per share.

For those that want to take advantage of BBY, options might be the route. The stock's Schaeffer's Volatility Index (SVI) of 38% stands higher than just 15% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

In addition to being a solid work-from-home stock, Best Buy has maintained excellent revenue numbers as well as consistent profits throughout the pandemic. Although Best Buy's annual revenue growth and net income growth has been slowed in 2020, the company has been able to keep its balance sheet in good standing. This was done while still maintaining a quarterly dividend for investors and raising their starting employee wage to $15 per hour. All aspects of Best Buy, from a fundamentals perspective, point towards a future of substantial growth potential.


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