Best Buy Stock Looks to Outperform After Earnings

Best Buy is scheduled to release earnings on Tuesday, August 24

Aug 20, 2021 at 11:27 AM
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Technology retailer Best Buy Co., Inc. (NYSE:BBY) will step into the earnings confessional on Tuesday, August 24 before the market opens. Best Buy has beat Wall Street analysts' earnings expectations on all four of its most recently released quarterly earnings reports, but there's more to those beats than meets the eye.

Despite technically beating analyst estimates, in the last eight quarters, six of the last eight reports have resulted in post-earnings moves to the downside, including a 9.3% bear gap in February. Overall, BBY averages a post-earnings move of 6% in the last two years regardless of direction. This time around, the options market is pricing in a larger than usual post-earnings move of 7.1%. 

On the charts, Best Buy stock is up 12% in 2021, but has been battling its 12-month breakeven level for the last three months. How the company fares with next week's earnings report could tip the scales analyst community; eight rate BBY a "buy" or better, and the other eight in coverage maintain "hold" or "strong sells."

From a fundamental perspective, Best Buy stock has strong potential as a value play. BBY currently trades at a low price-earnings ratio of 12.87 and has a decent forward price-earnings ratio of 15.31. In addition, Best Buy has increased revenues and net income by 19% and 124%, respectively, since fiscal 2017. BBY also has a stable balance sheet with $4.4 billion in cash and $3.99 billion in debt, making Best Buy stock an intriguing potential buy for long-term investors.

 

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