Episode Details

Best Buy Co., Inc. (BBY) Q2 FY2027 — The stock fell 4.4% on the print even though it beat and raised guidance — and every analyst who covered it raised their price target anyway. Best Buy beat its adjusted EPS bar and raised full-year guidance, but a $34 million Supreme Court tariff refund accounts for most of the earnings beat and the margin expansion — strip it out and the quarter missed. THE CALL: NEUTRAL (3/5, MODERATE) — base-case value ~$90 vs ~$90.27 today. KEY METRICS: - Revenue $9,779M, +3.6% YoY, ~$185M above consensus - Comparable sales +4.1% enterprise, +4.5% Domestic - Adjusted diluted EPS $1.47 vs a $1.39 bar (+15% YoY); GAAP diluted EPS $1.48 (+70% YoY) - $34M IEEPA tariff refund = ~62% of Domestic gross-margin expansion, ~87% of adjusted operating-margin expansion, ~$0.12/share after tax - Ex-refund adjusted EPS ~$1.35 vs the $1.39 bar — would have missed - FY27 guidance raised: revenue to $42.3–$42.8B, comps to +1.9%–+3.0%, adjusted EPS to $6.70–$6.90 - Cash $2,255M, net cash ~$1,086M, $3.0B of buyback authorization unused, $3.84 annual dividend (4.3% yield, 1.68x FCF-covered) - Inventory $6,296M, +8.3% vs revenue +3.6% — a watch item into the holiday quarter - Our fair value ~$90 (band $78–$100) vs the Street average of $84.08 and the stock at $90.27 What to watch: Q3 FY2027 domestic gross margin ex-refund, and whether inventory (+8.3% on +3.6% revenue) resolves as a pre-build or a markdown risk Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.