To The Moon

$Best Buy(BBY)$ is scheduled to release its Q1 Fiscal Year 2026 earnings on 29 May 2025, before the market open.

Adjusted Diluted EPS: The consensus estimate is around $1.09 per share, which would represent a year-over-year decline of approximately 9.2% from the $1.20 reported in Q1 FY25. There has been a slight upward revision (0.2%) in the consensus EPS estimate over the past 30 days, suggesting some analysts are becoming slightly more optimistic.

Revenue: Analysts anticipate revenue to be around $8.77 billion to $8.82 billion, indicating a slight year-over-year decline of around 0.9% to 0.35% compared to the $8.847 billion in Q1 FY25.

Comparable Sales: Best Buy's prior guidance for Q1 FY26 indicated comparable sales to be "slightly down" compared to the previous year.

Operating Income Rate: The company projected an adjusted operating income rate of approximately 3.4% for Q1 FY 26.

Best Buy (BBY) Last Earning Call

Best Buy (BBY) recently reported its Q4 Fiscal Year 2025 earnings on 04 March 2025, and is expected to release its Q1 Fiscal Year 2026 earnings on 29 May 2025.

Summary of the Q4 FY25 earnings (reported March 4, 2025)

Adjusted Diluted EPS: $2.58, which beat analyst estimates of $2.42.

Revenue: $13.948 billion, surpassing estimates of $13.702 billion.

Comparable Sales: Increased by 0.5% at the enterprise level. Domestic comparable sales saw a slight increase of 0.2%, while international comparable sales increased by 3.8%.

Key Drivers: Growth in computing, tablets, and services largely offset declines in appliances, home theater, and gaming.

Online Sales: Domestic online revenue increased by 2.6% on a comparable basis, representing 39.5% of total Domestic revenue.

Profitability: Domestic gross profit rate improved to 20.9% (vs. 20.4% last year), mainly due to improved performance from membership offerings and services.

Shareholder Returns: The company returned $415 million to shareholders in Q4 FY25 through dividends and share repurchases.

Dividend: Best Buy announced a 1% increase in its quarterly dividend to $0.95 per share.

Best Buy provided guidance for fiscal year 2026, anticipating: Revenue: Between $41.4 billion and $42.2 billion. Comparable Sales: Expected to be flat to 2% growth, with growth weighted more towards the second half of the year. Adjusted Diluted EPS: Projected to be in the range of $6.20 to $6.60.

Best Buy acknowledges that high inflation continues to influence consumer behavior, leading to cautious and value-driven discretionary spending, particularly on big-ticket items. Best Buy is focusing on strengthening its omni-channel presence and developing incremental profit streams like Best Buy Marketplace and Best Buy Ads.

Key Factors to Watch (and anticipated trends)

Consumer Spending Environment: The overriding theme influencing Best Buy remains the cautious consumer. High inflation has continued to impact discretionary spending, especially for big-ticket electronics and appliances. While the company's Q4 FY25 saw a slight positive comparable sales trend, Q1 is historically a softer quarter for electronics retail. Analysts expect this trend to persist.

Product Category Performance:

Computing and Mobile Phones: Expected to be the largest revenue driver, but analysts anticipate a slight decline of around 1.7% from the prior year.

Consumer Electronics: Expected to be relatively flat, with a minor decline of about 0.1%.

Appliances and Entertainment: Anticipated to show declines of around 2.2% and 2.1% respectively, consistent with the broader slowdown in these categories.

Gross Profit Rate: In Q4 FY25, Best Buy saw an improved domestic gross profit rate driven by better performance from membership offerings and services. Investors will be looking to see if this trend continues to positively impact Q1 FY26 profitability despite potential sales weakness.

Cost Management and Efficiency: Given the challenging sales environment, effective cost management and operational efficiency will be crucial for Best Buy to maintain profitability. Investors will be keen to hear management's commentary on these efforts.

Membership and Services Growth: Best Buy has been investing in its membership programs and services. Any updates on the growth of paid memberships and the financial contribution from these offerings will be closely scrutinized, as they represent a key area for incremental profit streams.

Full-Year FY26 Guidance Reaffirmation or Revision: While Q1 is just the start of the fiscal year, investors will be listening intently to see if Best Buy reaffirms its full-year FY26 guidance (revenue of $41.4 billion to $42.2 billion, comparable sales of 0.0% to 2.0% growth, and adjusted diluted EPS of $6.20 to $6.60). Any adjustments could signal a shift in the company's outlook for the remainder of the year.

Best Buy (BBY) Price Target

Based on 20 analysts from Tiger Brokers offering 12 month price targets for Best Buy Co in the last 3 months. The average price target is $83.68 with a high forecast of $101.00 and a low forecast of $64.00. The average price target represents a 15.87% change from the last price of $69.92.

Currently, Zacks Investment Research has a Zacks Rank #4 (Sell) on BBY, suggesting potential underperformance in the near term. However, the Most Accurate Estimate for Q1 EPS is slightly higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +4.45%. This could indicate a potential for a slight earnings beat. Best Buy has historically beaten EPS estimates in three out of the last four quarters.

Technical Analysis - Exponential Moving Average (EMA)

I think the continued challenges in consumer electronics market would have investors concerned on how Best Buy would navigate in this uncertain environment brought by tariffs turbulence, the cost management would be a crucial point for Best Buy to maintain its profitability.

As of now, we are seeing a negative momentum and the share price is barely above the 50-day period, which mean that the bears are in control, and we might see some sell-off ahead of the earnings as investors might consider to take profits.

Summary

The Q1 FY 26 earnings report for Best Buy is expected to reflect continued challenges in the consumer electronics market, with analysts forecasting a decline in both revenue and EPS year-over-year. The focus for investors will be on whether the company can exceed these tempered expectations, demonstrate effective cost control, and show continued progress in its strategic initiatives like memberships and services, all while providing a clear outlook for the rest of fiscal year 2026.

Appreciate if you could share your thoughts in the comment section whether you think Best Buy would be able to show improved cost management to maintain its profitability.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.