Best Buy Co., Inc. (NYSE:BBY) shareholders are probably feeling a little disappointed, since its shares fell 4.0% to US$82.44 in the week after its latest second-quarter results. The result was positive overall - although revenues of US$9.8b were in line with what the analysts predicted, Best Buy surprised by delivering a statutory profit of US$1.48 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following last week's earnings report, Best Buy's 21 analysts are forecasting 2027 revenues to be US$42.7b, approximately in line with the last 12 months. Statutory earnings per share are predicted to swell 10% to US$6.66. In the lead-up to this report, the analysts had been modelling revenues of US$42.0b and earnings per share (EPS) of US$6.52 in 2027. So the consensus seems to have become somewhat more optimistic on Best Buy's earnings potential following these results.
See our latest analysis for Best Buy
The consensus price target was unchanged at US$86.40, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Best Buy, with the most bullish analyst valuing it at US$100.00 and the most bearish at US$71.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Best Buy is forecast to grow faster in the future than it has in the past, with revenues expected to display 2.2% annualised growth until the end of 2027. If achieved, this would be a much better result than the 5.2% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.0% per year. Although Best Buy's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Best Buy following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$86.40, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Best Buy going out to 2029, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Best Buy , and understanding it should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.