Best Buy Co., Inc. (NYSE:BBY) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a credible result overall - although revenues of US$9.3b were in line with what the analysts predicted, Best Buy surprised by delivering a statutory profit of US$1.35 per share, a notable 17% above expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the consensus from Best Buy's 26 analysts is for revenues of US$41.6b in 2025, which would reflect a noticeable 2.2% decline in revenue compared to the last year of performance. Statutory earnings per share are predicted to rise 4.0% to US$6.10. Before this earnings report, the analysts had been forecasting revenues of US$41.6b and earnings per share (EPS) of US$5.90 in 2025. So the consensus seems to have become somewhat more optimistic on Best Buy's earnings potential following these results.
The consensus price target rose 15% to US$104, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. The most optimistic Best Buy analyst has a price target of US$123 per share, while the most pessimistic values it at US$80.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One more thing stood out to us about these estimates, and it's the idea that Best Buy's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 4.4% to the end of 2025. This tops off a historical decline of 0.3% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 4.8% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Best Buy to suffer worse than the wider 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. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Best Buy. Long-term earnings power is much more important than next year's profits. We have forecasts for Best Buy going out to 2027, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Best Buy .
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.