Is Best Buy a buy off its highs?

It’s time to breakdown a retail name. Here is the breakdown on $BBY, otherwise known as Best Buy.

Current Price: $99.53

52/Wk High: $124.89

52/Wk Low: $48.105

Market Cap: $25.8 Billion

Dividend: $2.20 / 2.21% Yield

Read below for the breakdown!

Best Buy is a major big-box retail name that provides technology products and services to customers. The company operates and maintains over 1,200 locations.

Due to COVID-19 restrictions, Best Buy stock saw a huge sell-off in March of 2020 but quickly rallied back to make new highs. Since making highs weeks ago the stock has been in sell mode.

Breaking down the stock price according to TREFIS (@trefis) data 83.4% of the stock price is based on Best Buy’s Domestic Segment.

Furthermore, 6.4% is based on the company’s International Segment and 10.2% is based on Cash and or net of debt.

Shifting into the numbers Best Buy beat Q3 expectations with an EPS of $2.06, much better than the expected EPS consensus estimate of $1.70. On a year over year basis, EPS was up 82.30%.

Not only that but revenues for Q3 2021 came in at $11.853 billion and enterprise comparable sales increased by 23% while domestic comparable online sales increased 174% throughout the quarter.

Breaking down revenues by segment, Best Buy’s Domestic segment produced $10.850 billion in revenues, much better than the Q3 2020 level of $8.964 billion.

As for the International segment, the segment produced $1.003 billion in revenues throughout the quarter, an improvement over the Q3 2020 levels of $800 million.

Shifting into operating income GAAP operating income was 4.7% of revenues, a .7% increase in operating income as a percent of revenues.

Investigating the domestic segment, the domestic gross profit rate landed at 24% in Q3, a .3% or 30 basis point decline in gross profit among Best Buy’s domestic segment.

Taking a look at the International segment, the segment produced a gross profit rate of 19%, much lower than the same time level in 2020 of 22.5%.

Best Buy also announced that share repurchases were still suspended but expected to resume in the fourth quarter of 2021.

Best Buy’s balance sheet on the otherhand is quite solid.

Total Debt: $1.926 Billion

Total Liabilities: $17.116 Billion

Total Assets: $21.202 Billion

Cash & Short Term Inv: $5.681 Billion

As for valuation, the numbers are not bad.

Price to Earnings: 15.23x

Price to Sales: 0.57x

Price to Book: 6.30x

Price to Cash Flow: 10.65x

Management has also done a solid job and continues to execute well.

Return on Equity: 47.90%

Return on Assets: 9.06%

Return on Invested Capital: 22.35%

Given the numbers the analysts are bullish with a mean price target of $126.60/share, representing a 26.19% increase.

It is also important to note that the high price target is $150.00/share, representing a 49.51% upside, while the low price target is $97.00/share, representing a -3.31% downside.

As for the technicals, Best Buy could be flashing an opportunity. According to the six-month charts, the MACD recently turned back to the upside with minimal momentum around -2.76.

The six-month charts are also indicating an RSI of 36.67 and CCI of -156.50, both of which are on the low end.

In short, Best Buy is a solid long-term pick and a buy at its current levels if the bull market continues. Best Buy is growing, managing to increase sales throughout COVID-19, and improving its financials.

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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.