Is it time to shop and buy Best Buy (NYSE:BBY) stock yet? I believe that prudent investors should wait until a crucial date has come and gone. It’s only a few days away, but you’ll have more data that can help you make a fully informed decision. Therefore, I am neutral on BBY stock.
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Minnesota-headquartered Best Buy operates a popular chain of electronics stores. Inflation may be easing in some places now, but 2023 was still a tough year for companies that sell discretionary items, including Best Buy.
In some ways, Best Buy should appeal to investors who focus on bargains and passive income. However, timing is everything, and you definitely don’t want to load up on Best Buy at the wrong time.
Is Best Buy Stock a Perfect Value-and-Yield Combo?
With the holiday season upon us, it’s time to hunt for great deals in the financial markets. So, is Best Buy a prime bargain right now? It might seem so, based on the company’s GAAP price-to-earnings (P/E) ratio, which is better than the sector average P/E ratio of roughly 16x.
In addition, Best Buy offers an annual dividend yield of 5.3% versus the consumer cyclical sector’s average dividend yield of about 1%. So far, it looks like Best Buy stock is a prime candidate because of its value-and-yield combination.
Hold on a minute, though. Best Buy stock hasn’t been a great performer this year, down 12.7% YTD. Even a 5.3% annual dividend won’t be much of a consolation prize if the stock continues to decline. Could it be a value-and-share trap?
We can look at the results of the third quarter of Best Buy Fiscal Year 2024 to determine if the company is showing growth. In the “Good News” column, we can say that Best Buy has a good record of quarterly EPS beats. Additionally, the company just posted another beat, posting fiscal Q3 2024 earnings of $1.29 per share versus Wall Street’s expectation of $1.19 per share.
The quarter wasn’t all positive for Best Buy, however. Notably, the company’s revenue of $9.76 billion missed the analyst consensus estimate of $9.9 billion in quarterly revenue.
Additionally, investors could be concerned about Best Buy’s guidance through FY2024. For the full year, Best Buy management now expects the company to generate $43.1 billion to $43.7 billion in revenue, compared to previous guidance of $43.8 billion to $44.5 billion. Also, Best Buy adjusted its FY2024 EPS outlook slightly lower, to $6.00-$6.30 from the company’s previous guidance of $6.00-$6.40.
Best Buy CEO Corie Barry provided an explanation for the company’s lowered guidance. “In the more recent macro environment, consumer demand has been even more uneven and difficult to predict.”
In other words, the American consumer may not be as resilient as some optimists may have hoped. In addition, Barry stated, “Based on the sales trends in Q3 and so far in November, we believe it is reasonable to lower our annual revenue outlook.”
A Big Day is Coming for Best Buy
In the end, I believe it is wise to wait until after this Friday before making any decisions on Best Buy stock. That’s because Black Friday, typically the biggest American shopping day of the year, is coming up, and Best Buy really needs to knock it out of the park with blockbuster deals. Therefore, it only makes sense to wait until the Black Friday sales data comes in.
Is Best Buy Stock a Buy, According to Analysts?
On TipRanks, BBY comes in as a Hold based on four Buy, 11 Hold and two Sell ratings assigned by analysts in the last three months. The average Best Buy stock price target is $78.27, which implies a 15.8% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell BBY stock, the most profitable analyst covering the stock (on a one-year time frame) is Anthony Chukumba of Loop Capital Markets, with an average return of 12.49% per estimate and 66% success rate Click the image below to learn more.
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Conclusion: Should You Consider Best Buy Stock?
Value seekers and dividend collectors may be tempted to just load up on Best Buy stock right now. After all, Best Buy posted another quarterly earnings loss.
Unfortunately, not all relevant data is available yet. Best Buy just lowered its full-year sales outlook, and the company is set to generate outstanding sales figures for Black Friday. Therefore, I am neutral on BBY stock at this time and am not considering buying any shares today.
Disclosure
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.