Best Buy Co. (BBY) surged in pre-market trading after delivering stronger-than-expected results in the second quarter. The consumer electronics retailer reported adjusted earnings of $1.34 per share, a gain of 10% year-over-year. This exceeded analysts’ expectations of $1.16 per share.
However, the retailer’s revenues dipped by 3.1% year-over-year to $9.29 billion in the second quarter. Although this decline was a concern, the number was still slightly above Street estimates of $9.23 billion. The company’s comparable sales also declined by 2.3% in Q2.
BBY Announces Dividend and Buys Back Shares
When it comes to shareholder returns, Best Buy returned a total of $301 million in the second quarter, consisting of $203 million in dividends and $98 million in share repurchases. Looking ahead, the company anticipates spending around $500 million on share repurchases throughout FY25.
Additionally, the company announced today that its board of directors has authorized a regular quarterly cash dividend of $0.94 per common share. This dividend will be payable on October 10 to shareholders of record as of the close of business on September 19, 2024.
BBY Issues Optimistic Guidance
Looking at the better-than-expected Q2 results, Matt Bilunas, Best Buy’s CFO, expressed optimism for the remainder of the year, noting that the industry is expected to continue stabilizing. As a result, the company revised its comparable sales forecast and now expects it to decline in the range of 3% to 1.5% in FY25, compared to its prior guidance of a decline of 3% to remaining flat.
Furthermore, the company raised its projection for adjusted diluted earnings in FY25 and now expects them to be in the range of $6.10 to $6.35, up from its prior guidance of $5.75 to $6.20 per share.
However, BBY narrowed its revenue outlook for FY25, with revenues likely to be between $41.3 billion and $41.9 billion, compared to prior guidance of $41.3 billion to $42.6 billion. For reference, analysts expect the company to report adjusted earnings of $6.10 per share on revenues of $41.79 billion in FY25.
What Is the Future of BBY Stock?
Analysts remain cautiously optimistic about BBY stock, with a Moderate Buy consensus rating based on eight Buys, seven Holds, and one Sell. Over the past year, BBY has increased by more than 15%, and the average BBY price target of $90.55 implies an upside potential of 3.1% from current levels. These analyst ratings are likely to change following BBY’s results today.
