Key Points
Best Buy beat on sales in fiscal Q2 2027.
It beat on earnings.
Then, Best Buy raised guidance, too!
Best Buy (NYSE: BBY) tumbled 4.3% through 11:50 a.m. ET this morning despite beating on sales, beating on earnings, and issuing raised guidance, too! Expected to earn only $1.35 per share (pro forma) on sales of $9.5 billion, Best Buy delivered $1.47 in profit and sales of $9.8 billion.
So... what's up with that? Why is Best Buy stock down when all it gave investors today was good news?
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Best Buy Q2 earnings
In fiscal Q2 2027, Best Buy grew its sales by a modest 3.6%, with same-store sales rising slightly faster at 4.1%. Pro forma profits did better, growing 15% year over year, while earnings calculated under generally accepted accounting principles (GAAP) showed tremendous improvement -- up 70%.
Really, the only bad news Best Buy had to offer was this: international sales declined by 4.2%. Still, international is a relatively small part of Best Buy -- and its underperformance was more than offset by outperformance in basically every other segment of the business.
What's next for Best Buy stock?
Can Best Buy continue to outperform? Management seems confident that it can. As it enters the year's back half, Best Buy forecasts fiscal 2027 sales of about $42.5 billion (Wall Street only expects $42.1 billion) and pro forma profits between $6.70 and $6.90 (Wall Street expects $6.62).
In other words, Best Buy should beat on both sales and earnings... all year long!
Admittedly, management did not give a GAAP forecast. But seeing as the difference between GAAP and non-GAAP in Q2 was just one penny, it seems likely GAAP earnings will turn out just fine. Assuming it ends up earning $6.80 or thereabouts this year and is therefore trading at about 12.2x current-year earnings, Best Buy stock looks like a buy to me.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Best Buy. The Motley Fool has a disclosure policy.