Why did Best Buy stock jump today?

Scott Olson/Getty Images News

Best Buy (NYSE:BBY) soared on Thursday after getting through the holiday quarter relatively intact despite major supply chain and staffing issues.

Same-store sales fell 2.3% during the quarter but commentary by CEO Corrie Barry on the earnings call indicated that pandemic trends may prove sticky with consumers. She also indicated that Best Buy is strategically investing for future growth.

"We are deliberately investing in our future and furthering our competitive differentiation which, as expected, impacted our Q4 profitability. The biggest areas of investment were our new membership program, technology and Best Buy Health, all core to our future growth potential."

Best Buy traded over $110 for the first time this year after the Q4 profit beat.

Comments

[The Benjamin Fund]

This article is only nibbling at what happened yesterday and how Wall St is viewing Best Buy at the moment. For context BBY missed Q4 sales estimates and also issued guidance for next year that missed consensus estimates on both top and bottom lines. Yet the stock went up 9% on heavy volume. Why? It wasn’t because of some nebulous claim that consumer spending on electronics is going to be permanently higher than everyone else thinks. Rather, they spent a good deal of time laying out a credible 3 year plan for where they’re taking the business - expanding into new product categories, capturing higher share of wallet with existing product categories thanks to Totaltech memberships, and gave some clarity on the cost side of the business as well. If they hit their plan, operating profit will grow by 35% in 3 years. Combined with continued share count reductions consistent with recent past (3-5 yr avg as well as FY13 guidance), EPS will grow by 50% in 3 years if they hit their plan.

The stock was up yesterday because enough investors are believing that management can execute on that plan which will result in a high teens CAGR in EPS rather than flat to negative that is currently priced into the stock.

[SA Analyst Are Bag Holders]

Since 2020 so many people sold their Best Buy shares and said inflation is going to damage Best Buy margins. When actually Best Buy net profit margins have improved since then.

[cputech]

"pandemic trends may prove sticky with consumers"

No they really won't. Sell this pig now while you have the chance.