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Best Buy Co., Inc. (BBY), headquartered in Richfield, Minnesota, retails consumer electronics, home office products, entertainment software, appliances, and related services through its retail stores, as well as its website. Valued at $18.6 billion by market cap, the company also retails pre-recorded home entertainment products through retail stores.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and BBY perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the specialty retail industry. Best Buy's market dominance in North American consumer electronics is rooted in its iconic brand, steadfast customer loyalty, and expansive product portfolio. With over 33% market share in offline sales, the company has cemented its status as the premier destination for electronics.
Despite its notable strength, BBY slipped 16.3% from its 52-week high of $103.71, achieved on Aug. 29. Over the past three months, BBY stock has declined 12.3%, underperforming the S&P 500 Index’s ($SPX) 5.4% gains during the same time frame.
In the longer term, shares of BBY fell 2.8% over the past six months but climbed 14.1% over the past 52 weeks, underperforming SPX’s six-month gains of 10.9% and solid 27% returns over the last year.
However, BBY has been trading below its 50-day moving average since late October. It is trading below its 200-day moving average recently.
Best Buy is facing tough competition from Amazon.com, Inc. (AMZN), Walmart Inc. (WMT), and Target Corporation (TGT), leading to weak sales in key product categories like appliances and home theater. Moreover, inflation, election distractions, and consumer hesitancy have also hurt demand. Additionally, high-margin categories including gaming and appliances are underperforming, signaling deeper issues, making it a less attractive investment in the near term.
On Nov. 26, BBY shares closed down more than 4% after reporting its Q3 results. Its EPS of $1.26 fell short of Wall Street expectations of $1.30. The company’s revenue was $9.4 billion, missing Wall Street forecasts of $9.6 billion. BBY expects full-year adjusted EPS to be between $6.10 and $6.25, and expects revenue in the range of $41.1 billion to $41.5 billion.
In the competitive arena of specialty retail, GameStop Corp. (GME) has taken the lead over BBY, showing resilience with a 31.7% uptick over the past six-months and 83.5% gains over the past 52 weeks.
Wall Street analysts are moderately bullish on BBY’s prospects. The stock has a consensus “Moderate Buy” rating from the 23 analysts covering it, and the mean price target of $100 suggests a potential upside of 15.1% from current price levels.
