Best Buy Co Inc (BBY) stock analysis

P/E above its 5-year median

Best Buy's P/E of 17.5 is above its own 5-year median of 13.5.

P/E below the industry

Best Buy's P/E of 17.5 is below the Consumer discretionary median of 19.6.

EV/EBITDA above its 5-year median

Best Buy's EV/EBITDA of 8.4 is above its 5-year median of 6.7.

P/B above the industry

Best Buy's price-to-book of 6.93 is above the Consumer discretionary median of 4.85.

Trading above fair value

The share price of $105.16 is above our fair value estimate of $92.95.

Margin of safety under 20%

The price is 13.1% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew -3.4% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -7.1% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 63.5% over the last twelve months, against a 5-year average of -9.9% a year.

Growing slower than the industry

Revenue grew 1.4% over the last twelve months; the Consumer discretionary median is 2.2%.

Guidance raised

Best Buy raised its FY27 Revenue outlook on Aug 27, 2026.

Gross margin improving

Gross margin was 22.7% over the last twelve months, against 22.5% a year earlier.

Return on equity over 15%

Return on equity was 43.1% over the last twelve months and averaged 44.9% over five years.

Return on capital over 10%

Return on invested capital was 55.1%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Best Buy's return on equity of 43.1% is above the Consumer discretionary median of 15.7%.

Earnings shrank over 5 years

Net income shrank 9.9% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 3.0% over the last twelve months, against a 5-year average of 3.1%.

Net margin below the industry

Best Buy's net margin of 3.0% is below the Consumer discretionary median of 3.1%.

Low debt

Debt is 36.7% of shareholders' equity, under the 40% we consider low.

Debt rising against equity

Debt to equity rose from 30.0% five years ago to 36.7%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 212% of total debt.

Interest well covered

Operating income covers interest expense 38.0 times.

Short-term assets cover short-term debts

Current assets are 1.12 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 4.31; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Best Buy paid dividends worth 3.6% of the share price over the last twelve months.

Yield below Treasuries

The 3.6% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Best Buy yields 3.6%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 63.1% of net income.

Covered by free cash flow

Dividends take 45.4% of free cash flow.