Morningstar Rating

Stock Research and Analysis

by R.J. Hottovy, CFA

Bulls Say

Best Buy has cut $860 million from its annual cost structure through space redesign efforts, cost of goods sold optimization, and SG&A reductions, and now targets $140 million in additional cost reductions through reduced returns/replacements/damages as well as logistics and supply chain enhancements.
Best Buy has re-engineered its online platform, improving the user experience and facilitating greater ship-from-store fulfillment capabilities.
New smartphone, tablet, gaming, and television technology innovations can provide periods of top-line outperformance. Read more 

Bears Say

Mass merchants, warehouse clubs, online retailers, and consumer product OEMs are all vying for market share, leading to increased price competition and limiting longer-term margin expansion opportunities.
Entertainment software sales will continue to shrink. Replacement categories will likely be slower-turning, lower-margin categories.
Warranty sales have historically been a disproportionate contributor to margins. If consumers gravitate to rival consumer electronics retailers for big-ticket items, there could be a profitability hit from the lost warranty sales. Read more 

Management

Hubert Joly was named president and CEO and appointed to the board in August 2012. Before taking the reins at Best Buy, Joly was CEO of hospitality/travel company Carlson and also held executive roles with Vivendi's video game business unit, Electronic   Read more 

Profile

Best Buy is the largest U.S. consumer electronics retailer, with 16% of the $203 billion market in fiscal 2014 (using estimates from the Consumer Electronics Association).  Read more 

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