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FRESH Analysis Report
Jun 9, 2026
3 days ago · 100% complete · +6 refreshed

Best Buy Co., Inc.

BBY NYSE Categories PDF
Consumer Cyclical · Specialty Retail
Richfield, MN 55423, United States IPO 1985 investors.bestbuy.com/investor-relations/overview/default.aspx Updated Jun 9, 7:11pm
Price
$75.12
Market Cap
$15.8B
Employees
85,000
Beta
1.33
Avg Volume
4,302,550
CEO
Corie Sue Barry
Business Description

Best Buy Co., Inc. operates as a prominent technology retailer across the United States and Canada. Its business structure is segmented into Domestic and International operations. The company's extensive product selection includes a wide array of computing devices such as desktops, notebooks, and associated peripherals, alongside mobile phones (which generate commissions from network carriers), networking equipment, and tablets (including e-readers). Customers can also find smartwatches and various consumer electronics, encompassing digital imaging devices, health and fitness gadgets, home theater systems, portable audio solutions (like headphones and speakers), and smart home products. Beyond electronics, Best Buy also supplies household appliances such as dishwashers, laundry machines, ovens, refrigerators, blenders, coffee makers, and vacuum cleaners. For entertainment, their offerings range from drones, movies, music, and toys to gaming hardware and software, including virtual reality products. Additionally, the company stocks miscellaneous items like baby products, food and beverages, luggage, outdoor living essentials, and sporting goods. In terms of services, Best Buy provides consultation, delivery, design assistance, health-related programs, installation, membership benefits, repair work, product setup, technical support, and warranty services. Products are distributed through both physical stores and online platforms, operating under various brand names including Best Buy, Best Buy Ads, Best Buy Business, Best Buy Health, CST, Current Health, Geek Squad, Lively, Magnolia, Best Buy Mobile, Pacific Kitchen, Home, and Yardbird. Their primary online presence is via bestbuy.com, currenthealth.com, lively.com, yardbird.com, and bestbuy.ca. As of January 30, 2022, the company maintained a network of 1,144 retail locations. Originally established in 1966 as Sound of Music, Inc., the corporation is headquartered in Richfield, Minnesota.

Business History
Generated: Jun 9, 2026 7:14pm
Price Overview
Last updated: Jun 9, 2026 7:11pm (3d ago)
$75.12
+0.95 (+1.28%)
Day Range
$74.30 – $76.56
52-Week Range
$55.10 – $84.99
50-Day MA
$63.31
200-Day MA
$69.79
Volume
3,058,241.00
Analyst Price Targets
Low $60.00
Consensus $76.40
High $90.00
(82 analysts)
Share Structure
Outstanding 210,767,000.00
Float 196,485,638.00
Free Float 93.2%
High free float — 93.2% of shares trade freely, ~6.8% held by insiders/institutions
Very liquid — most shares trade freely. Low insider ownership can mean less management alignment, but makes large position sizing straightforward.
Price History (1 Year)
Last updated: Jun 9, 2026 7:18pm (3d ago)
Revenue & Net Income Trend
The directional story — useful even when net income is negative.
Last updated: Jun 9, 2026 7:18pm (3d ago)
Revenue
The top line — total sales before any costs or taxes are subtracted. A measure of how much business the company is doing.
Net Income
The bottom line — profit left after subtracting all expenses, interest, and taxes from revenue. Reflects accounting profitability, but includes non-cash items like depreciation, so it isn't the same as cash earned.
Operating Cash Flow
The real cash generated by the day-to-day business — selling products, paying suppliers, collecting from customers. Calculated from net income by adding back non-cash items and adjusting for timing (unpaid bills, unsold inventory). When OCF consistently lags net income, the reported profit may not be converting to real money.
Period Revenue Net Income Net Margin YoY/QoQ
Key Metrics
API Direct from provider CALC Derived from statements
Industry comparison last run: Jun 9, 2026 7:14pm
P/E Ratio (Price per dollar of earnings)
API
Stock Price / EPS (Diluted)
13.83
Stock Price: $75.12
EPS (Diluted): 5.06
P/B Ratio (Price vs net asset value)
API
Stock Price / Book Value Per Share
4.63
Stock Price: $75.12
Total Equity: $2.96B
Shares: 212,100,000
EV/EBITDA (Total value vs operating profit)
API
Enterprise Value / EBITDA
8.29
Market Cap: $15.83B
Total Debt: $1.80B
Cash: $1.74B
EBITDA: $2.28B
Enterprise Value (Takeover price (cap + debt - cash))
API
Market Cap + Total Debt - Cash
$16.1B
Market Cap: $15.83B
Total Debt: $1.80B
Cash: $1.74B
Gross Margin (Revenue left after direct costs)
API
Gross Profit / Revenue
22.5%
Gross Profit: $9.37B
Revenue: $41.69B
Operating Margin (Revenue left after all operations)
API
Operating Income / Revenue
3.3%
Operating Income: $1.39B
Revenue: $41.69B
Net Margin (Revenue left as actual profit)
API
Net Income / Revenue
2.6%
Net Income: $1.07B
Revenue: $41.69B
ROE (Profit from shareholder equity)
API
Net Income / Total Equity
40.0%
Net Income: $1.07B
Total Equity: $2.96B
ROIC (Profit from all invested capital)
API
NOPAT / Invested Capital
13.5%
Operating Income: $1.39B
Tax Rate: 23.9%
Equity: $2.96B
Total Debt: $1.80B
Cash: $1.74B
Current Ratio (Can it pay short-term bills)
API
Current Assets / Current Liabilities
1.11
Current Assets: $8.50B
Current Liabilities: $7.68B
Debt/Equity (Leverage — debt vs equity)
CALC
Total Debt / Total Equity
0.61
Short-Term Debt: $634.00M
Long-Term Debt: $1.17B
Total Debt: $1.80B
Total Equity: $2.96B
Rev/Share (Top-line per share)
CALC
Revenue / Shares Outstanding
$196.56
Revenue: $41.69B
Shares: 212,100,000
Book Value/Share (Net assets per share)
CALC
(Total Assets - Total Liabilities) / Shares
$13.97
Total Equity: $2.96B
Shares: 212,100,000
FCF/Share (Real cash generated per share)
CALC
(Operating Cash Flow + CapEx) / Shares
$5.93
Operating CF: $1.96B
CapEx: -$704.00M
Shares: 212,100,000
CapEx is negative (outflow) — added to OCF to get FCF
Div Yield (Annual income from holding)
API
Last Annual Dividend / Stock Price
5.8%
Last Dividend: N/A
Stock Price: $75.12
Payout Ratio (Earnings paid out as dividends)
Dividends Paid / Net Income
Dividends Paid: N/A
Net Income: $1.07B
Dividends paid not available in cash flow statement
Industry Benchmarks
Last run: Jun 9, 2026 7:13pm
Compares BBY against LLM-researched typical ranges for its industry. One research call per industry, cached indefinitely — every stock in the same industry reuses the same baseline.
Deep Analysis
Last run: Jun 9, 2026 7:17:37 pm

Pre-flight intelligence scans the company first, then routes to the right analytical methods.

0 Company Classification — What type of company is this?
1 Industry Landscape — Where is the industry headed?
2 Company Momentum — Where is this company trending?
3 Forward Projection — 1Y & 2Y projected metrics (requires Layer 1 + 2)
4a DCF Valuation — Present value of future cash flows
4b Earnings Power Value — Floor value — worth with zero growth
4c Anchored PE — Industry PE adjusted for growth differential
4d Reverse DCF — What growth is the market pricing in?
4e Revenue-Based DCF — For growth/narrative companies (skip if mature earner)
Not applicable for Mature Earner companies
4f Anchored P/S — Price-to-Sales peer comparison (skip if mature earner)
Not applicable for Mature Earner companies
4g Scenario Analysis — Bull / Base / Bear (skip if mature earner)
Not applicable for Mature Earner companies
4h Dividend Discount Model — For dividend/income stocks only
Not applicable for Mature Earner companies
4i Book Value Analysis — For deep value / turnaround stocks only
Not applicable for Mature Earner companies
4j Insider Activity — Are insiders buying or selling?
4f Cash Flow Quality — How trustworthy is the FCF?
4g Debt Maturity Risk — Can it handle its debt?
4h Macro Environment — Rates, market valuation, volatility
4i Sector Intelligence — How does this company compare within its sector?
4j Revenue Confidence — How reliable is the growth projection?
4k Sensitivity Analysis — How fragile is the fair value estimate?
4l Sector Demand Cycle — Is the sector in a boom, steady state, or contraction?
5 AI Investigation — Adaptive research engine (Claude)
5b Thesis Evaluation — What does the market believe? (narrative/platform stocks only)
Not applicable for Mature Earner companies
6 Valuation Synthesis — Weighted verdict from all methods (requires Layer 4)
Income Statement (Annual)
Last updated: Jun 9, 2026 7:18pm (3d ago)
Metric 2022 2023 2024 2025 2026
Revenue $51.8B $46.3B $43.5B $41.5B $41.7B
Cost of Revenue $40.1B $36.4B $33.8B $32.1B $32.3B
Gross Profit $11.6B $9.9B $9.6B $9.4B $9.4B
Operating Expenses $8.6B $8.1B $8.0B $7.6B $8.0B
Operating Income $3.0B $1.8B $1.6B $1.7B $1.4B
Net Income $2.5B $1.4B $1.2B $927.0M $1.1B
EBITDA $3.9B $2.7B $2.6B $2.2B $2.3B
EPS $9.94 $6.31 $5.70 $4.31 $5.06
EPS (Diluted)
Balance Sheet (Annual)
Last updated: Jun 9, 2026 7:11pm (3d ago)
Metric 2022 2023 2024 2025 2026
Cash & Equivalents $2.9B $1.9B $1.4B $1.6B $1.7B
Total Current Assets $10.5B $8.8B $7.9B $8.2B $8.5B
Total Assets $17.5B $15.8B $15.0B $14.8B $14.7B
Current Liabilities $10.7B $9.0B $7.9B $8.0B $7.7B
Long-Term Debt $1.2B $1.2B $1.2B $1.1B $1.2B
Total Liabilities $14.5B $13.0B $11.9B $12.0B $11.7B
Total Equity $3.0B $2.8B $3.1B $2.8B $3.0B
Retained Earnings $2.7B $2.4B $2.7B $2.5B $2.6B
Cash Flow (Annual)
Last updated: Jun 9, 2026 7:18pm (3d ago)
Metric 2022 2023 2024 2025 2026
Operating Cash Flow $3.3B $1.8B $1.5B $2.1B $2.0B
Capital Expenditure -$737.0M -$930.0M -$795.0M -$706.0M -$704.0M
Free Cash Flow $2.5B $894.0M $675.0M $1.4B $1.3B
Acquisitions (net) -$468.0M $0 $14.0M $0 $0
Debt Repayment
Dividends Paid
Stock Buybacks -$3.5B -$1.0B -$340.0M -$500.0M -$273.0M
Net Change in Cash -$2.4B -$952.0M -$460.0M $75.0M -$130.0M
Analyst Estimates (Annual)
Last updated: Jun 9, 2026 7:11pm (3d ago)
Metric 2028 2029 2030 2031
Revenue $42.5B
$42.3B – $42.8B
$43.3B
$43.2B – $43.4B
$43.3B
$42.9B – $43.6B
$44.0B
$43.6B – $44.4B
EBITDA $2.6B
$2.6B – $2.6B
$2.6B
$2.6B – $2.6B
$2.6B
$2.6B – $2.6B
$2.7B
$2.6B – $2.7B
Net Income $1.4B
$1.4B – $1.6B
$1.7B
$1.6B – $1.8B
$1.8B
$1.8B – $1.9B
$2.0B
$2.0B – $2.0B
EPS
Growth Trends (YoY %)
Last updated: Jun 9, 2026 7:18pm (3d ago)
Metric 2023 2024 2025 2026
Revenue Growth -10.6% -6.1% -4.4% +0.4%
Gross Profit Growth -14.8% -3.1% -2.3% -0.1%
Operating Income Growth -40.1% -12.3% +9.3% -19.3%
Net Income Growth -42.2% -12.5% -25.3% +15.3%
EBITDA Growth -30.0% -5.3% -14.8% +3.2%
Insider Trading (Recent)
Last updated: Jun 9, 2026 7:17pm (3d ago)
Type codes PPurchase SSale AAward / grant MOption exercise FIn-kind (tax) CConversion GGift DReturn to issuer
All SEC Form 4 codes
Open market
P Purchase
Open-market or private purchase of shares.
S Sale
Open-market or private sale of shares.
Compensation (Rule 16b-3)
A Award / grant
Grant or award of securities (RSUs, options, etc.) under Rule 16b-3.
D Return to issuer
Securities disposed back to the company under Rule 16b-3.
F In-kind (tax)
Shares withheld or delivered to pay the option-exercise price or tax — not an open-market sale.
I Discretionary
Discretionary transaction under an employee plan — Rule 16b-3(f).
M Option exercise
Exercise or conversion of a derivative (option/RSU) into shares — exempt.
Derivatives
C Conversion
Conversion of a derivative security into the underlying shares.
E Short expiration
Expiration of a short derivative position.
H Long expiration
Expiration or cancellation of a long derivative position with value received.
O OTM exercise
Exercise of an out-of-the-money derivative.
X ITM exercise
Exercise of an in-the-money or at-the-money derivative.
Other exempt
G Gift
Bona fide gift of securities.
L Small acquisition
Small acquisition under Rule 16a-6.
W Inheritance
Acquisition or disposition by will or the laws of descent.
Z Voting trust
Deposit into or withdrawal from a voting trust.
Other
J Other
Other acquisition or disposition (explained in a Form 4 footnote).
K Equity swap
Transaction in an equity swap or similar instrument.
U Tender / buyout
Disposition via tender of shares in a change-of-control transaction.

Compensation-plan codes (A, D, F, M) are routine and rarely directional. Open-market P (buy) and S (sale) carry the most signal.

Date Insider Type Shares Price Value
2026-05-29 SCHULZE RICHARD M S-Sale 27,132.00 $77.69 $2.1M
2026-05-29 SCHULZE RICHARD M S-Sale 133,778.00 $75.09 $10.0M
2026-05-29 SCHULZE RICHARD M S-Sale 147,868.00 $76.96 $11.4M
2026-06-01 SCHULZE RICHARD M G-Gift 350.00 $0.00 $0
2026-05-29 SCHULZE RICHARD M S-Sale 191,572.00 $75.96 $14.6M
2026-06-01 SCHULZE RICHARD M G-Gift 350.00 $0.00 $0
2026-05-29 Watson Mathew S-Sale 1,784.00 $73.80 $131,659
2026-04-15 SCHULZE RICHARD M G-Gift 20,975.00 $0.00 $0
2026-04-15 SCHULZE RICHARD M G-Gift 1,252.00 $0.00 $0
2026-04-15 SCHULZE RICHARD M G-Gift 939.00 $0.00 $0
2026-03-20 Hartman Todd G. A-Award 15,924.00 $0.00 $0
2026-03-23 Hartman Todd G. S-Sale 5,339.00 $64.02 $341,797
2026-03-20 Bonfig Jason J A-Award 23,886.00 $0.00 $0
2026-03-23 Bonfig Jason J S-Sale 6,336.00 $64.02 $405,624
2026-03-20 Watson Mathew A-Award 5,972.00 $0.00 $0
2026-03-23 Watson Mathew S-Sale 3,298.00 $64.02 $211,135
2026-03-20 Scarlett Kathleen A-Award 21,895.00 $0.00 $0
2026-03-23 Scarlett Kathleen S-Sale 8,049.00 $64.02 $515,289
2026-03-20 Bilunas Matthew M A-Award 29,857.00 $0.00 $0
2026-03-23 Bilunas Matthew M S-Sale 11,356.00 $64.02 $727,000
Dividend History (Last 20)
Last updated: Jun 9, 2026 7:11pm (3d ago)
Date Dividend Declaration Record Payment
2026-06-18 $0.96 2026-05-28 2026-06-18 2026-07-09
2026-03-24 $0.96 2026-03-03 2026-03-24 2026-04-14
2025-12-16 $0.95 2025-11-25 2025-12-16 2026-01-06
2025-09-18 $0.95 2025-08-28 2025-09-18 2025-10-09
2025-06-18 $0.95 2025-05-29 2025-06-19 2025-07-10
2025-03-25 $0.95 2025-03-04 2025-03-25 2025-04-15
2024-12-17 $0.94 2024-11-26 2024-12-17 2025-01-07
2024-09-19 $0.94 2024-08-29 2024-09-19 2024-10-10
2024-06-20 $0.94 2024-05-30 2024-06-20 2024-07-11
2024-03-20 $0.94 2024-02-29 2024-03-21 2024-04-11
2023-12-11 $0.92 2023-11-21 2023-12-12 2024-01-02
2023-09-18 $0.92 2023-08-29 2023-09-19 2023-10-10
2023-06-14 $0.92 2023-05-25 2023-06-15 2023-07-06
2023-03-22 $0.92 2023-03-02 2023-03-23 2023-04-13
2022-12-12 $0.88 2022-11-22 2022-12-13 2023-01-03
2022-09-19 $0.88 2022-08-30 2022-09-20 2022-10-11
2022-06-13 $0.88 2022-05-24 2022-06-14 2022-07-05
2022-03-23 $0.88 2022-03-03 2022-03-24 2022-04-14
2021-12-13 $0.70 2021-11-23 2021-12-14 2022-01-04
2021-09-13 $0.70 2021-08-24 2021-09-14 2021-10-05
Narrative Economics
The story the market is telling about this stock — the intangible X-factor (founder mythology, cult dynamics, TAM-of-imagination) that moves price beyond what cash flows alone explain. After Shiller, Narrative Economics.
No narrative profile yet for BBY.
Delvantic AI Findings
Independent analyst synthesis · Delvantic - Cairn AI · generated 2026-06-09 19:18:14
Reviews the pipeline's own verdicts
Verdict Fairly valued income play, not a bargain — fair value $70-85, hold for the 5.8% dividend + buyback yield but don't add above $75 given insider selling and unproven earnings durability.

Starting with the raw numbers: revenue went from $51.8B (FY22) to $41.7B (FY26) — a 19.5% decline over four years, with operating income collapsing from $3.0B to $1.39B (op margin 5.8% → 3.3%). That's not "managed decline," that's structural margin compression on top of revenue erosion. The most recent comparable quarters tell a more nuanced story though: Q1 FY26 (May 2026) rev $8.94B vs Q1 FY25 $8.77B is +1.9%, and the holiday quarter Jan 2026 at $13.81B vs $13.95B prior year is essentially flat (-1.0%) but with NI jumping from $117M to $541M — a real earnings recovery as the prior-year quarter was abnormally depressed. FY26 NI of $1.07B vs $927M prior is +15% even with revenue flat. So the trajectory has stabilized; the question is whether that's a cyclical bottom (PC/TV replacement cycle, AI-PC refresh) or a plateau before the next leg down.

At $75.12 with $15.83B market cap, on $1.26B FCF, that's a 12.5x P/FCF and a ~8% FCF yield, plus a 5.8% dividend yield. The synthesis is right that this is priced for decline, not growth — 13.8x TTM P/E and 0.33x P/S are deep-value retailer multiples. But I disagree with the synthesis label "Reasonable Premium" — the math says discount, and even the model's own prose contradicts its verdict. The honest read: BBY trades at a discount appropriate to its terminal-value risk, and whether that discount is sufficient depends on whether 2026 earnings ($1.07B) represent a sustainable floor or a cyclical peak before secular pressure resumes. The 36.5% FCF CAGR is largely working capital and capex normalization, not earnings power — capex dropped to $704M from historical $900M-1B+ levels, which is not sustainable for a 1,000-store footprint.

The contrarian-bear case the models underweight: 22.5% gross margin is the lowest in a decade and not obviously defended — Amazon's private-label electronics, Costco's pricing, and direct-to-consumer (Apple, Samsung, Dyson) all chip at the same SKUs. The "services pivot" remains a rounding error on consolidated margin; Geek Squad and Totaltech haven't moved the gross margin needle. Insider activity is unambiguously negative — five sales on May 29, 2026 totaling ~500K shares clustered right after the strong Q1 print is textbook "sell into strength," and there are zero open-market buys. The contrarian-bull case the bear models underweight: at 8% FCF yield + 5.8% dividend with buybacks shrinking the float (~$1B+ annually), shareholder yield is ~11-12% even with zero growth, and the balance sheet carries $1.74B cash with manageable lease-adjusted debt. That's a Graham-style return profile if earnings merely hold flat.

Data quality concerns: the balance sheet tile is missing total debt and equity entirely — that's a real gap for assessing leverage on a retailer with significant operating leases. The TTM-derived ROE of 40% is arithmetically suspicious (implies equity base of ~$2.7B, which would mean buybacks have nearly evaporated book equity — plausible but worth verifying before citing). The "2026" fiscal dates are Best Buy's fiscal calendar, not calendar 2026, so the most recent data is actually ~May 2025 by calendar — six months stale by the time anyone acts on this. I dissent from the synthesis verdict of "Reasonable Premium" — the stock is reasonably valued to modestly cheap on current numbers, not premium. I agree with Market Forces on headwinds being real but disagree that they make the stock un-investable at this multiple. The honest verdict: this is a coin-flip between value trap and 11% shareholder-yield compounder, and the insider selling tilts the odds toward "fair value, not bargain." Fair value range $70-85 depending on whether you believe FY26 earnings hold; current price sits in the middle of that band.

GPT Critique
Second-opinion review · gpt-4o · generated 2026-06-09 19:18:19
Reviews the Opus findings above
Verdict I disagree with Opus's verdict of "fairly valued" — Best Buy is fairly to modestly undervalued at $75, considering the structural decline risks and insider selling. Fair value leans closer to $65-75, with a cautious stance on earnings sustainability.

In analyzing Best Buy's financial data independently, several key points stand out. Best Buy's revenue has declined from $51.76 billion in FY22 to $41.69 billion in FY26, indicating a significant 19% drop over four years. This reflects a structural decline typical of a mature retailer facing intense competition, particularly from e-commerce giants like Amazon. However, the recent quarterly data shows a slight revenue stabilization, with Q1 FY26 revenue at $8.94 billion, a 1.9% increase from the previous year. The net income for the same quarter surged to $276 million from $202 million in Q1 FY25, suggesting some earnings recovery. The company's free cash flow remains robust at $1.26 billion, giving it an 8% FCF yield, and its 5.8% dividend yield is attractive to income-focused investors. Despite these positive cash flow metrics, the underlying revenue and margin pressures indicate significant challenges ahead.

Opus argues that Best Buy is not in a "managed decline" but rather experiencing structural margin compression and revenue erosion. I concur with this assessment, given the stark decline in operating income from $3.0 billion to $1.39 billion over four years, reflecting a massive margin compression. This highlights the challenges Best Buy faces in maintaining its profitability amidst declining revenues. However, I diverge from Opus on the synthesis's valuation label of "Reasonable Premium." Opus suggests that Best Buy trades at a discount appropriate to its terminal-value risk, and I agree. The TTM P/E of 13.8x and P/S of 0.33x indeed reflect a company priced for decline, not growth, aligning more with a deep-value perspective rather than a "reasonable premium."

Where I disagree with Opus is on the sustainability of the earnings recovery. Opus notes a potential cyclical bottom due to the recent earnings increase, but the broader revenue decline and low gross margins (22.5%) suggest continued vulnerability. The recent insider selling, totaling around 500,000 shares, further underscores concerns about future growth prospects and aligns with the "sell into strength" strategy, which is a red flag for potential investors. Moreover, the missing balance sheet data, particularly regarding total debt and equity, is a critical gap that prevents a comprehensive risk assessment. This omission should be addressed before making any investment decisions.

A skeptic of both our views might argue that Best Buy's transformation into a service-oriented retailer through initiatives like Geek Squad and Totaltech could eventually stabilize and potentially grow its margins. They might also point to the company's strong cash flow generation and zero-net-debt position as buffers against industry headwinds. However, given the intense competitive pressures and margin erosion, these arguments would need to be substantiated by more concrete evidence of sustained margin improvements and revenue stabilization.

Advanced Analysis Forensic deep-dive · two lenses
Two separate reads — Company Quality (is it a great business?) and Valuation (is it mispriced?), kept deliberately apart · 2026-06-09 19:19:38
Delvantic - Cairn AI
Quality-lite + Fair price — Pass, set a bid in the low-$60s 7/10
Honest, cash-generative retailer in managed decline trading right on top of fair value — nothing to do at $75.
The cruxWhether revenue truly stabilizes here or keeps eroding — that's what determines if today's ~$76 deserved value holds or drifts lower.
Company Quality
+20
Solid
edge √Σ 122 · risk √Σ 102 · conf 7/10
Valuation / Mispricing
-11
Fairly Valued
edge √Σ 36 · risk √Σ 47 · conf 6/10
Liquidity & RunwaySelf-Funding
DilutionShare Count Shrinking
Earnings QualityHigh Earnings Quality
The Play — combined read across both lenses Delvantic - Cairn AI

Quality at +20 tells me this is a clean, disciplined operator — real FCF, real buybacks, no accounting games — but it's a harvester in a shrinking category, not a compounder. Value at -11 (essentially fair, attractive below $62) tells me the market already knows all of that. When a +20 quality business trades at fair value, you don't get paid to own the decline risk; you get paid to wait for the dislocation. So I pass at $75.12. No starter, no nibble — the asymmetry isn't there.

My playbook: work a GTC bid around $62 for a starter (roughly 1% of book), and only scale to a full 2.5–3% position if it trades into the high-$50s on a tape-driven washout (holiday miss, guide-down, tariff scare) without the thesis actually breaking — i.e., FCF still north of $1B and buyback still running. Above $80 with no inflection in comps, I'm uninterested entirely; the deserved-value band caps the upside. The only thing that flips me to aggressive at current levels is evidence the top line has genuinely inflected — two consecutive quarters of positive comps plus services mix actually moving the margin line. Until then, BBY is a watchlist name, not a portfolio name.

The evidence behind each score — switch lenses
+20 Solid edge √Σ 122 · risk √Σ 102 · conf 7/10

Best Buy is a mature consumer-electronics retailer that throws off real cash: FY26 FCF of $1.26B on $41.69B of revenue, with OCF/NI of 1.58x, accruals at -4.5% of assets, Beneish M of -2.83 and Altman Z of 4.28. Earnings integrity looks high — there is no sign of accruals-driven or working-capital-driven profit. Capital allocation is shareholder-friendly: diluted share count has fallen from 249.3M (2022) to 212.1M (2026), a ~4% CAGR shrink, with buybacks running roughly 8x SBC, so per-share economics are genuinely being concentrated.

The quality concern is the underlying business trajectory. Revenue has contracted every year from $51.76B (2022) to $41.69B (2026) — roughly $10B of top-line gone — and operating margin has slipped from 5.8% to 3.3%, with net income falling from $2.45B to $1.07B. Gross margin held near 22.5%, so the damage is operating deleverage on a shrinking base, not pricing. Net debt is mildly negative ($-61M) against $1.74B liquid cash, so the balance sheet is adequate but not a fortress — much of the cushion sits in operating leases and inventory financing typical of big-box retail.

Insider tape is loud but mostly noise: of $238M sold over 12 months, the overwhelming bulk is founder Richard Schulze diversifying a legacy stake (four sales totaling ~$38M on 2026-05-29 alone, plus gifts), not operating management signaling. Operating insiders (Hartman, Bonfig, Watson) only sold small slivers tied to award vestings. So the 'unusual heavy selling' flag overstates management conviction concerns.

Strengths 3
m78
Clean earnings quality
OCF/NI 1.58x, accruals -4.5% of assets, Beneish M -2.83, Altman Z 4.28 — mechanical checks find no manipulation signal; cash conversion exceeds reported profit.
m72
Disciplined per-share compounding
Diluted shares fell from 249.3M to 212.1M (-15% in 4 years, ~-4% CAGR); buyback/SBC ratio 802% means repurchases dwarf stock comp — per-share value is being concentrated.
m60
Durable FCF generation
FCF of $1.26B in FY26 and $2.52B/$0.89B/$0.68B/$1.39B/$1.26B over five years — the business self-funds capex, dividends and buybacks even through a revenue decline.
Concerns 4
m70
Multi-year revenue contraction
Revenue: $51.76B → $46.30B → $43.45B → $41.53B → $41.69B. Roughly $10B / ~20% top-line erosion over four years with only a flat stabilization in FY26 — raises questions about category durability vs. Amazon/Costco.
m65
Operating margin compression
Op margin fell from 5.8% (2022) to 3.3% (2026); net income roughly halved from $2.45B to $1.07B despite stable ~22.5% gross margin — implies SG&A deleverage on a shrinking sales base.
m30
Thin balance-sheet cushion
Net cash of -$61M; $1.74B liquid cash is real but not a fortress for a $41.7B-revenue retailer with sizable lease and inventory obligations.
m20
Founder distribution activity
Schulze sold ~$38M in a single day (2026-05-29) plus ongoing gifts — likely estate/diversification, not operational signal, but the volume is notable. Operating insiders sold only small post-vest slivers.
This is a well-run, financially honest retailer in a structurally challenged category. The accounting is clean, cash conversion is real, and management is shrinking the share count rather than diluting — that's the profile of an operator who knows the TAM isn't growing and is harvesting accordingly. But I can't call it great when revenue has fallen $10B in four years and operating margin has nearly halved; that's a business in managed decline, not a compounder. The insider 'red flag' is mostly the founder's estate work, not management running for the exits. Net: a solid, disciplined mature earner — quality is real, durability is the open question.
Verify before trusting this (6)
  • Whether FY26 revenue stabilization ($41.69B vs $41.53B) reflects category recovery (PC refresh, AI hardware) or one-off comps — segment/category disclosure in 10-K
  • Operating lease obligations and true adjusted leverage vs. the headline net-cash figure
  • Vendor/supplier concentration (Apple, Samsung, Microsoft) and gross-margin sensitivity to mix
  • Whether Schulze's 10b5-1 plan continues and remaining stake size — is this an ongoing overhang on float?
  • Membership program (Best Buy Plus/Total) economics and whether it's offsetting transactional revenue declines
  • Services / Geek Squad / Best Buy Health contribution to operating profit vs. core retail
-11 Fairly Valued edge √Σ 36 · risk √Σ 47 · conf 6/10
price $75 vs deserved ~$72–80 midpoint ~$76 — gap is ~1%, essentially fair. attractive below $62.00

The e2e synthesis pegs BBY at a 'Reasonable Premium,' and that squares with the facts: ~$15.8B market cap on a mature retailer doing high-single-digit FCF yield, buying back stock, and paying a ~4% dividend. Deserved value for a clean-accounting operator harvesting a structurally flat-to-declining category sits in the $70–$85 range depending on whether you weight the services/membership optionality or the revenue erosion ($10B of top-line lost over four years, compressed op margins). $75.12 lands squarely in that band.

What's priced in: stable comps, continued buybacks, and modest services-mix benefit — not heroic AI-refresh-cycle growth, but not terminal decline either. The bull case (omnichannel moat + Geek Squad stickiness) and bear case (Amazon/DTC erosion + DIY pressure on services) roughly cancel at this multiple. Earnings quality is high (score 3), so no haircut to deserved value is warranted, but quality being good is already in the price. I don't see a gap worth swinging at.

Cheap signals 2
m30
Real FCF yield + shrinking share count
Mature cash generation funds a ~4% dividend and ongoing buybacks on a $15.8B cap — a tangible per-share tailwind even if the top line stays flat.
m20
Clean earnings, no quality haircut
Earnings-quality score 3 means the reported numbers are real; deserved value doesn't need to be marked down for accruals or one-offs.
Rich / priced-in 3
m35
Structural revenue erosion not fully discounted
Revenue down ~$10B over four years and operating margin compressed; the current multiple implies stabilization that hasn't been demonstrated.
m25
Services pivot is a narrative, not yet a re-rating catalyst
Geek Squad/memberships are sticky but not large enough or growing fast enough to justify a multiple expansion from here without a hardware refresh cycle.
m20
e2e synthesis already calls it a 'Reasonable Premium'
The composite work itself does not flag undervaluation; it flags a defensible-but-not-cheap price.
Fairly valued — this is the boring, correct answer. The business is fine, the accounting is honest, the capital return is real, but the price already reflects all of that and the market knows it. I'd need a low-$60s handle (~15–20% below here) before the FCF yield and buyback math give me a real margin of safety against the revenue-erosion risk. Today, I pass on valuation alone.
Verify before trusting this (5)
  • Forward guidance on comparable sales and services-attach rates in the next earnings print
  • Gross and operating margin trajectory — is the compression bottoming?
  • Buyback pace and remaining authorization vs FCF
  • Mix shift: services/membership revenue as % of total and its margin
  • Any signal on a PC/AI hardware refresh cycle materially lifting unit demand
Two lenses kept deliberately separate — Company Quality is price-agnostic; Valuation is price-conditional. The scores are not blended (yet). Filing-level items (convertibles, lock-ups, customer concentration) are v2 — see each lens's "verify."
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Data via Financial Modeling Prep · Cached for performance · fmp
v1.1.330 · 344c2a54 · 2026-06-09 20:20:16