With Q2 Earnings Around The Corner, Will Best Buy Stock Live Up To Its Name?

Best Buy (NYSE: BBY), a specialty retailer of consumer electronics, is scheduled to report its Q2 2025 results on Thursday, August 29 (Best Buy’s FY’24 ended Jan 2024). We expect the retailer’s stock to likely trade sideways due to mixed Q2 results with revenues missing but earnings beating estimates marginally.

BBY stock grew 16% from around $78 to $89 since the beginning of this year, slightly underperforming the broader indices, with the S&P growing 18% over the same period. Notably, BBY’s peer Amazon (NASDAQ: AMZN) has seen lower gains of 14% over the same period. BBY stock price has increased this year despite a weak sales projection, suggesting that the retailer’s stock may be overvalued in the long run. A tough comparison with the pandemic, stimulus-induced growth over the past three years, and inflationary headwinds have hurt the consumer electronics retailing niche. Best Buy expects the market to cool down before sales regain momentum in fiscal 2026.

For the upcoming Q2, the company expects comparable sales to decline by approximately 3% and its non-GAAP operating income rate to be approximately 3.5%. For the full year FY’25, the company expects revenue of $41.3-42.6 billion and EPS is expected to land in a range of $5.75-6.20. In addition, its comparable sales are expected to land in the range of -3% to 0%.

Notably, BBY stock has seen little change, moving slightly from levels of $85 in early January 2021 to around $90 now, vs. an increase of about 50% for the S&P 500 over this roughly 3-year period. Overall, the performance of BBY stock with respect to the index has been lackluster. Returns for the stock were 4% in 2021, -17% in 2022, and 3% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that BBY underperformed the S&P in 2021 and 2023. In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the Consumer Discretionary sector including H, WMG, and AMZN, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could BBY face a similar situation as it did in 2021 and 2023 and underperform the S&P over the next 12 months – or will it see a strong jump?

Our forecast indicates that Best Buy’s valuation is $90 a share, which is in line with the current market price. Look at our interactive dashboard analysis on Best Buy’s Earnings Preview: What To Expect in Q2? for more details.

(1) Revenues expected to be below consensus estimates 

Trefis estimates Best Buy’s Q2 2025 revenues to be around $9.2 billion, slightly below the consensus estimate. In Q1, the electronics retailer posted $8.9 billion in revenue, down 6.5% y-o-y. The retailer saw its domestic comparable sales fall 6.3% during the quarter. The largest drivers of the comparable sales decline on a weighted basis were home theater, appliances, mobile phones, and gaming. International comparable sales dropped 3.3% during the quarter. We forecast Best Buy’s Revenues to be $41.9 billion for the full-year fiscal 2025, down 4% y-o-y.

2) EPS likely to come in ahead of expectations

Best Buy’s Q2 2025 earnings per share (EPS) is expected to be $1.18 per Trefis analysis, marginally beating the consensus estimate. In Q1, the electronics retailer posted an adjusted EPS of $1.20 compared to $1.15 a year ago. Its domestic gross margin improved by 80 basis points y-o-y to 23.4% in Q1, driven by improved financial performance from the company’s membership offerings, which included higher service margin rates. The international business gross margin was down 90 basis points to 22.8% due to unfavorable product margin rates. Also, the retailer’s adjusted operating margin grew to 3.8% in Q1 2025 from 3.4% a year ago.

(3) Stock price estimate aligns with the current market price

Going by our Best Buy’s Valuation, with an EPS estimate of around $6.09 and a P/E multiple of 14.7x in fiscal 2025, this translates to a price of around $90, which is in line with the current market price.

It is helpful to see how its peers stack up. BBY Peers shows how Best Buy compares against its peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.