Best Buy’s Stock To Rebound After A 12% Drop In Five Days?

Best Buy’s (NYSE: BBY) stock, a specialty retailer of consumer electronics, home-office products, entertainment software, appliances, and related services, has declined by almost 12% over the last five trading days and currently stands at around $100. The market seemed to react downward to the company’s mixed fourth-quarter results. While the retailer’s fourth-quarter adjusted earnings came in 3 cents higher than the estimates, its revenues were $300 million below the expectations. It should be noted that the broader S&P 500 returned close to a 2% decline over the last five days. Now, is BBY stock poised to fall further? We believe that the company’s stock is still undervalued at about 14x consensus fiscal 2022 (year ending Jan 2022) earnings and that the stock could grow going forward. There is a strong chance of a rise in BBY’s stock over the next month (twenty-one trading days) based on our machine learning analysis of trends in the stock price over the last five years. See our analysis on BBY’s Stock Chances of Rise for more details.

5D: BBY -12%, vs. S&P500 -2.4%; Underperformed market (2% likelihood event)

• Best Buy stock declined 12% over a five-day trading period ending 3/3/2021, compared to a broader market (S&P500) decline of 2.4%
• A change of -12% or more over five trading days is a 2% likelihood event, which has occurred 30 times out of 1256 in the last five years

10D: BBY -15%, vs. S&P500 -2.5%; Underperformed market (15% likelihood event)

• Best Buy stock declined 15% over the last ten trading days (two weeks), compared to a broader market (S&P500) decline of 2.5%
• A change of -15% or more over ten trading days is a 15% likelihood event, which has occurred 191 times out of 1240 in the last five years

21D: BBY -6.8%, vs. S&P500 1.6%; Underperformed market (14% likelihood event)

• Best Buy stock declined 6.8% the last twenty-one trading days (one month), compared to the broader market (S&P500) rise of 1.6%
• A change of -6.8% or more over twenty-one trading days is a 14% likelihood event, which has occurred 172 times out of 1198 in the last five years

While BBY stock has moved lower post Q4 results, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for Cognex vs Amazon shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here.

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