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.
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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.
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