Best Buy (BBY) is one of the worst S&P 500 stocks Tuesday after the electronics retailer came up short of top- and bottom-line expectations for its fiscal 2025 third quarter and cut its full-year outlook.
In the three months ended November 2, Best Buy's revenue decreased 3.2% year over year to $9.45 billion, pressured by a 2.9% drop in enterprise comparable-store sales. Its earnings per share (EPS) fell 2.3% from the year-ago period to $1.26.
"In the third quarter, our teams delivered an in-line non-GAAP operating income rate on sales that were a little softer than expected," said Best Buy CEO Corie Barry in a statement. "During the second half of the quarter, a combination of the ongoing macro uncertainty, customers waiting for deals and sales events, and distraction during the run-up to the election, particularly in non-essential categories, led to softer-than-expected demand."
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BBY's top and bottom lines came up short of analysts’ expectations. Wall Street was anticipating revenue of $9.6 billion and earnings of $1.29 per share, according to CNBC.
As a result of the weak quarter, Best Buy reduced its full-year outlook. The company now expects revenue in the range of $41.1 billion to $41.5 billion and earnings per share of $6.10 to $6.25. This compares to its previous forecast for revenue of $41.3 billion to $41.9 billion and earnings of $6.10 to $6.35.
"For the fourth quarter, we expect comparable sales versus last year to be flat to down 3% and our non-GAAP operating income rate to be in the range of 4.6% to 4.8%," said Best Buy Chief Financial Officer Matt Bilunas.
Is Best Buy stock a buy, sell or hold?
Heading into Tuesday's session, Best Buy was up nearly 23% for the year to date on a total return basis (price change plus dividend). And Wall Street has a bullish tilt on the high-yielding dividend stock (4% at current levels).
According to S&P Global Market Intelligence, the average analyst target price for BBY stock is $103.36, representing implied upside of nearly 20% to current levels. Meanwhile, the consensus recommendation is Buy.
Not everyone is all in on the consumer discretionary stock, though. Financial services firm Wedbush has a Neutral rating (equivalent to a Hold) on Best Buy with a $95 price target.
"BBY has the most exposure to increased tariffs in our hardlines coverage given its reliance on imported products (we estimate 90% of cost of goods sold), many of which come from or depend on parts from China (we estimate 40% of COGS), and very discretionary products," wrote Wedbush analyst Seth Basham in a November 21 note.
"While BBY would move to mitigate these costs, the complexity of the electronics supply chain and its deep ties to China make this difficult to do quickly,' the analyst added.
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