Best Buy Stock Earnings: BBY gains 4.7% after posting better-than-expected earnings

Best Buy (BBY) stock is advancing on Tuesday after posting earnings that impressed a rather skeptical market. Shares are up 4.7% at $77.14 about an hour into the regular session.

Best Buy stock earnings

The company best known for retailing home appliances, TVs and consumer electronics posted adjusted earnings per share of $1.54, which far outstripped Wall Street's expectations of $1.35. This was almost half of the $2.98 per share that Best Buy offered in the second quarter one year ago, but the market applauded the effort because of management's recent sounding of the alarm.

One month ago the company released a statement saying that consumers had sharply reduced purchases of consumer electronics. Best Buy CEO Corie Barry said purchases were primarily down since higher inflation had forced consumers to focus on food and energy costs and because consumers had ramped up purchases of laptops and other items during the pandemic when staying at home was a necessity. The reported quarter's revenue of $10.3 billion attested to the consumer pullback. During Q2 2021, Best Buy had reported sales of $11.85 billion, meaning sales for this quarter were down 13% YoY.

Adjusted operating income at 4.1% of revenue was a tad better than the company's projected 3.7% when it released it dour statement one month back. The retailer, however, withdrew its guidance for fiscal 2025 (calendar 2024) since it said that the current macro outlook was difficult to gauge.

Best Buy stock forecast

BBY stock finds itself in a funny place. Only on August 22, last week did it break through the lower trend line resistance that had been in place since the end of June. Now it needs to retake that trend line, which is near $82 at the moment. 

Best Buy stock finds itself sandwiched between the 20-day and 50-day moving averages. So far in Tuesday's session, the 20-day moving average is sending signals of resistance, and the 50-day is offering support. Without a close above that 20-day, the evidence for a sustained rally is light. The market seems happy that the results were better than expected but not ready to give BBY stock a better multiple. They like BBY at a sub-10 P/E ratio.

The swing highs from May and August 16 both collapsed around $85, so this appears to be the point of stubborn resistance. Above there the summer's upward sloping price channel has a top trend line near $88.

BBY daily chart