Option Traders Should Move With Caution Around This Retail Giant

Shares of Best Buy have seen more than a 30% decline year-to-date

Sep 30, 2022 at 12:04 PM
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Best Buy Co., Inc. (NYSE:BBY) is an American consumer electronics retail company with operations in the United States and Canada. The company’s product offerings include laptops, phones, cameras, video games and consoles, PCs, TVs, washing machines, refrigerators, and various other digital items. BBY also offers repair services for various tech products at its over 1,000 store locations through its Geek Squad brand. At last glance, BBY is down 0.9% at $64.51, earlier touching a more than two-year low of $62.42.

Best Buy stock has decreased about 36% year-over-year and BBY is currently trading down 52% since hitting a peak of $141.97 last November. Additionally, the retail stock has dropped 34% year-to-date and has seen a 9% decline over the past month. As a result, Best Buy stock now provides an intriguing valuation at a forward price-earnings ratio of 11.19 and an incredibly low price-sales ratio of 0.32. Moreover, BBY offers a very attractive dividend yield of 5.12% at a forward dividend of $3.52.

The consumer electronics business continues to have some important fundamental issues though. For example, BBY holds a weak balance sheet with $965 million in cash and $4.05 billion in total debt. In addition, Best Buy is estimated to report an 11.3% decrease in revenues and a massive 38.3% decline in earnings for fiscal 2023.

Nonetheless, Best Buy is expected to see a return to growth for fiscal 2024 with estimates predicting a 1% increase in revenues and an 11.2% increase in earnings. The business had previously generated consistent top and bottom line growth on an annual basis, growing its revenues and net income 20.7% and 67.6%, respectively, between fiscal 2019 and fiscal 2022. Overall, Best Buy stock provides a solid option for dividend investors looking for a high yield and a low valuation that could potentially appreciate over time.


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