Best Buy (NYSE:BBY) Shares Gap Up Following Better-Than-Expected Earnings

Key Points

• Best Buy shares jumped after the retailer reported better-than-expected quarterly results, opening well above the prior close as investors reacted positively to the earnings beat.
• The company posted earnings of $1.28 per share and revenue of $8.94 billion, both above analyst forecasts, while comparable sales rose 2% and management cited strength in gaming and computing.
• Best Buy also raised its quarterly dividend to $0.96 per share from $0.95, lifting the annualized payout to $3.84 and implying a yield of about 5.2%.

Best Buy Co., Inc. (NYSE:BBY - Get Free Report)'s stock price gapped up before the market opened on Thursday after the company announced better than expected quarterly earnings. The stock had previously closed at $64.54, but opened at $69.70. Best Buy shares last traded at $72.9780, with a volume of 2,922,364 shares traded.

The technology retailer reported $1.28 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $1.22 by $0.06. The business had revenue of $8.94 billion for the quarter, compared to analyst estimates of $8.82 billion. Best Buy had a net margin of 2.56% and a return on equity of 49.17%. Best Buy's revenue for the quarter was up 1.9% compared to the same quarter last year. During the same quarter in the prior year, the business posted $1.15 EPS.

Best Buy Increases Dividend

The business also recently disclosed a quarterly dividend, which was paid on Tuesday, April 14th. Stockholders of record on Tuesday, March 24th were issued a $0.96 dividend. This is a boost from Best Buy's previous quarterly dividend of $0.95. The ex-dividend date of this dividend was Tuesday, March 24th. This represents a $3.84 annualized dividend and a dividend yield of 5.2%. Best Buy's payout ratio is presently 76.19%.

Key Best Buy News

Here are the key news stories impacting Best Buy this week:

• Positive Sentiment: Q1 earnings and revenue both beat estimates. Best Buy’s top- and bottom-line outperformance suggests demand was better than expected and supports the stock’s move higher.
• Positive Sentiment: Comparable sales turned positive. The 2% enterprise comps growth signals that the retailer may be stabilizing after a sales slump, which is encouraging for investors watching for a turnaround. Best Buy Reports First Quarter Results
• Positive Sentiment: Key product categories strengthened. Management cited gaming and computing as growth drivers, indicating healthier consumer demand in higher-margin electronics categories. Best Buy beats on top and bottom lines as retailer aims to reinvigorate sales
• Neutral Sentiment: Appliances were a weak spot. That offset some of the upside, but it did not outweigh the stronger categories in this quarter. Best Buy surges on earnings beat and strong sales growth

Wall Street Analyst Weigh In

Several research firms have recently issued reports on BBY. BNP Paribas Exane increased their target price on shares of Best Buy from $68.00 to $74.00 and gave the stock a "neutral" rating in a research note on Wednesday, March 4th. Citigroup cut their price target on Best Buy from $69.00 to $60.00 and set a "neutral" rating for the company in a research note on Tuesday, May 12th. Telsey Advisory Group reduced their price target on Best Buy from $95.00 to $80.00 and set an "outperform" rating for the company in a report on Wednesday, March 4th. Guggenheim reiterated a "buy" rating and set a $90.00 price target on shares of Best Buy in a research report on Wednesday, March 4th. Finally, JPMorgan Chase & Co. lowered Best Buy from an "overweight" rating to a "neutral" rating and dropped their price objective for the company from $99.00 to $76.00 in a report on Monday, February 2nd. Nine equities research analysts have rated the stock with a Buy rating, eleven have assigned a Hold rating and two have issued a Sell rating to the company. According to MarketBeat, the company currently has an average rating of "Hold" and an average target price of $70.25.

Insider Buying and Selling

In other Best Buy news, insider Todd G. Hartman sold 5,339 shares of Best Buy stock in a transaction on Monday, March 23rd. The shares were sold at an average price of $64.02, for a total transaction of $341,802.78. Following the sale, the insider owned 44,098 shares of the company's stock, valued at $2,823,153.96. The trade was a 10.80% decrease in their position. The sale was disclosed in a document filed with the SEC, which is available through this hyperlink. Also, EVP Jason J. Bonfig sold 6,336 shares of the company's stock in a transaction on Monday, March 23rd. The stock was sold at an average price of $64.02, for a total transaction of $405,630.72. Following the sale, the executive vice president directly owned 79,137 shares of the company's stock, valued at $5,066,350.74. The trade was a 7.41% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders have sold a total of 77,247 shares of company stock worth $4,945,353 in the last ninety days. Company insiders own 0.47% of the company's stock.

Institutional Trading of Best Buy

A number of hedge funds have recently bought and sold shares of BBY. Woodline Partners LP grew its position in shares of Best Buy by 40.1% in the first quarter. Woodline Partners LP now owns 16,436 shares of the technology retailer's stock valued at $1,210,000 after purchasing an additional 4,701 shares in the last quarter. Daiwa Securities Group Inc. lifted its position in Best Buy by 4.4% during the second quarter. Daiwa Securities Group Inc. now owns 29,560 shares of the technology retailer's stock worth $1,984,000 after buying an additional 1,234 shares in the last quarter. Investment Management Corp of Ontario lifted its position in Best Buy by 127.7% during the second quarter. Investment Management Corp of Ontario now owns 12,997 shares of the technology retailer's stock worth $872,000 after buying an additional 7,288 shares in the last quarter. Ieq Capital LLC boosted its stake in Best Buy by 155.4% during the second quarter. Ieq Capital LLC now owns 160,568 shares of the technology retailer's stock worth $10,779,000 after buying an additional 97,688 shares during the last quarter. Finally, Alliancebernstein L.P. boosted its stake in Best Buy by 32.0% during the second quarter. Alliancebernstein L.P. now owns 313,584 shares of the technology retailer's stock worth $21,051,000 after buying an additional 76,102 shares during the last quarter. Institutional investors and hedge funds own 80.96% of the company's stock.

Best Buy Trading Up 14.2%

The company has a market capitalization of $15.53 billion, a PE ratio of 14.57, a PEG ratio of 1.56 and a beta of 1.22. The company has a fifty day simple moving average of $61.74 and a 200-day simple moving average of $66.83. The company has a current ratio of 1.11, a quick ratio of 0.43 and a debt-to-equity ratio of 0.39.

Best Buy Company Profile

Best Buy Co, Inc is a leading North American consumer electronics retailer that sells a broad range of products including computers, mobile phones, televisions and home theater systems, major appliances, smart-home devices, gaming hardware and software, wearables and related accessories. The company operates through a mix of large-format stores, smaller specialty locations and an e-commerce platform, offering national and private-brand merchandise from major consumer-technology manufacturers as well as third-party sellers.

Beyond product retailing, Best Buy provides a suite of services aimed at installation, repair and ongoing technical support.

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