Even as recently as a year ago, it's probably something one would never expect to hear again. But, Best Buy Co Inc. (NYSE:BBY) is a buy. Yes, the electronics retailer that was on the brink of disaster not too long ago has fought its way out of the quicksand, and is on the road to recovery. In fact, once could even argue that BBY is a little undervalued.
Just so there's no confusion, yes, this is the same Best Buy that in March of 2012 posted a quarterly loss of $1.7 billion after several quarters of same-store sales declines. This is the same retailer that ousted CEO Brian Dunn after just a short while on the job for what's still only vaguely an "inappropriate relationship." This is the same BBY that ultimately became a showroom for Amazon.com, demonstrating merchandise in-person for consumers who would then turn around and buy that good online at a noticeably better price than Best Buy's. Many thought Best Buy wouldn't survive. But, many were wrong.
How did the company dig itself out of such a deep hole? Largely on the back, and with leadership from, CEO Hubert Joly, who has more than lived up to his expectation as a turnaround artist. He did is, however, the old-fashioned way... without gimmicks, doing things right, like price-matching and better customer service.
The proof of the pudding is in the numbers. For the first time in a long time, Best Buy Co Inc. isn't on pace to post lower per-share income. Analysts expect to see a bottom line of $2.31 per share this fiscal year, versus $2.07 per share last year. These same pros believe BBY will earn $2.60 per share next fiscal year, when the revenue decline is expected to at least stabilize.
And for what it's worth, Best Buy has topped estimates in seven straight quarters. It's likely that the current profit forecasts underestimate how well the electronics retailer may do.
The really compelling part of the Best Buy Co turnaround story, however, is the current and forward-looking value of BBY stock. Its trailing P/E is 12.1, and the forward-looking one is 12.7. Both are below the average P/E levels of 15.5 for computer and electronics retailers. In that light, it's no wonder the stock has had such an easy time renewing its already-impressive uptrend this week.
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