Best Buy Stock Rallies After Strong Quarterly Report
Shares of Best Buy gained strong upside momentum after the company released its second-quarter results. Best Buy reported revenue of $11.85 billion and GAAP earnings of $2.90 per share, beating analyst estimates on both earnings and revenue.
Best Buy stated that comparable sales grew by 20% while operating income increased by 40% compared to the previous year. The company added that results also looked strong compared to results reached back in 2019.
Best Buy noted that demand for technology products and services remained strong. In addition, demand was supported by higher wages, government stimulus and high savings levels.
Best Buy expects that customer demand will stay strong and is raising its outlook for the year, expecting that comparable sales will grow by 9% – 11% compared to the previous estimate which called for growth of 3% – 6%.
In the third quarter, Best Buy expects to report revenue of $11.4 billion – $11.6 billion. Comparable sales are projected to decline by 1% – 3%.
What’s Next For Best Buy Stock?
Currently, analysts expect that Best Buy will report earnings of $8.28 per share this year and $8.49 per share next year. Analyst estimates have been trending higher in recent months, and it looks that they will continue to grow after the strong quarterly report.
The stock is trading at 14 forward P/E which is not extremely cheap for a company in this segment, but valuations are high as S&P 500 is at all-time high levels. There is some potential for multiple expansion, especially if earnings estimates continue to move higher.
The second-quarter report indicated that consumer demand remained strong, and the company’s performance looked good even in comparison with the pre-pandemic year 2019. In this light, the stock should have a good chance to get closer to all-tme high levels near $128.50 which were reached back in May 2020.
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