Why Best Buy Stock Surged 12% in November

What happened

Shares of Best Buy (NYSE: BBY) gained 12.3% in value last month, according to data provided by S&P Global Market Intelligence.

The big blue electronics store reported better-than-expected earnings results last month, which propelled the shares to new highs.

Image source: Best Buy.

So what

Here is a look at the highlights:

  • Revenue was $9.764 billion, slightly up from $9.59 billion in the year-ago quarter.
  • Comparable-store sales growth was 1.7%, above management’s guidance. This came on top of strong year-ago growth of 4.3%.
  • Non-GAAP (adjusted) earnings per share came in at $1.13, up from $0.93 in the year-ago quarter.

These are strong numbers, especially in the context of the uncertain retail environment with tariffs and trade wars. What’s encouraging is that Best Buy reported solid growth across a range of products, including appliances, headphones, and tablets and computing. Strength in these areas was offset by weakness in gaming and home theater. Headphones and televisions were two categories impacted by the List 4 tariffs, which went into effect in September.

During the conference call to discuss the quarter, CEO Corie Barry said: “Our teams continue to execute well and navigate ever-increasing customer expectations, our consistently competitive retail environment, and the uncertain tariff situation. And they are doing all of this while making significant progress against our Building the New Blue strategy, which we believe will uniquely position us over the long term.”

Now what

Barry believes they are on track to deliver on their long-term strategy to reach $50 billion in revenue and achieve an adjusted operating margin of 5% by fiscal 2025.

For the current fiscal year, management is now calling for adjusted earnings in the range of $5.81 to $5.91 per share. This is slightly higher than the previous guidance, reflecting improving business momentum heading into the holidays.

The latest results and positive outlook for the holiday quarter were encouraging for investors with the overhang of new tariffs about to kick in this month, which will impact computing, mobile phones, and gaming consoles. But management’s guidance already includes the expected effects of these tariffs.

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John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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