To The Moon

$Best Buy(BBY)$ is scheduled to report its Q2 2026 earnings on Thursday, August 28, 2025. The market's outlook is one of caution, as the consumer electronics retailer faces ongoing challenges from a weak consumer spending environment and tough competition.

The company's prior guidance for the full fiscal year already reflected these headwinds, and investors will be looking for confirmation of its ability to navigate them.

Revenue : The consensus among analysts projects Q2 revenue to be around $9.23 billion, which would be a slight decline from the same period last year.

EPS : Earnings per share (EPS) are expected to be approximately $1.22, also representing a year-over-year decrease. This reflects the pressure on both the top and bottom lines.

Summary of Best Buy's Fiscal Q1 2026 Earnings

Best Buy (BBY) reported a mixed fiscal Q1 2026, where it navigated a challenging retail environment to deliver better-than-expected profitability but faced ongoing revenue headwinds. The company reported revenue of $8.77 billion, a slight year-over-year decline of 0.9%, and comparable sales were down 0.7%, reflecting a cautious consumer and a tough macroeconomic backdrop.

Despite the top-line pressures, Best Buy's profitability metrics showed resilience. The company delivered an adjusted EPS of $1.15, surpassing analyst expectations of $1.09. This was driven by a slight improvement in its gross profit margin, which reached 23.4%, thanks to better performance in its services category, including membership offerings. The company also announced a restructuring of its Best Buy Health business, which resulted in a one-time charge.

The Lesson Learned from Q1 2026 Guidance

The main lesson from Best Buy's Q1 2026 guidance is that external, macroeconomic factors, such as tariffs, can significantly impact a company's outlook, even if its internal operations are solid.

Following the Q1 report, Best Buy reduced its full-year guidance for both revenue and earnings. The company lowered its revenue forecast from a range of $41.4-$42.2 billion to $41.1-$41.9 billion and its adjusted EPS outlook from $6.20-$6.60 to $6.15-$6.30. Management explicitly cited the impact of new and existing tariffs as the primary reason for the revised forecast.

The company's commentary highlighted that while its strategic initiatives—such as memberships and an improved omnichannel experience—are yielding positive results, these efforts are being offset by external pressures beyond its control. The lesson is that for companies with thin margins and high exposure to global supply chains, a strong operational performance may not be enough to satisfy the market if macroeconomic headwinds are intensifying. The guidance underscored that investors must look beyond the immediate quarter and consider how broader economic and trade policies will affect a company's ability to achieve its full-year targets.

Analysis of Q2 2026 Earnings Expectations

Macroeconomic Headwinds: The retail environment for discretionary goods, especially big-ticket electronics, remains challenged by persistent inflation and consumer caution. Best Buy's performance is highly sensitive to these broader economic trends.

Strategic Initiatives: The company has been focusing on its "Best Buy Marketplace" and "Best Buy Ads" initiatives, as well as its membership programs, to diversify revenue streams. Investors will be keen to hear about the progress of these initiatives and their impact on profitability.

Key Metrics Investors Should Watch

Comparable Sales (Comp Sales): This is the most critical metric for a retailer like Best Buy. It measures sales at stores that have been open for at least one year. A better-than-expected comparable sales number, particularly in the domestic segment, would signal resilience in consumer demand and be a significant positive catalyst.

Gross Margin: In a period of high competition and promotional activity, Best Buy's ability to maintain or improve its gross margin will be a key indicator of its pricing power and cost management.

Forward Guidance: As with most companies, the guidance for Q3 and the full fiscal year will likely be the most important factor in the stock's post-earnings performance. Any downward revision would likely trigger a sell-off, while a maintained or slightly improved outlook could be a bullish signal.

Inventory Levels: A check on inventory will provide insight into the company's ability to manage supply and demand, which is crucial for profitability and avoiding markdowns.

Best Buy (BBY) Price Target

Based on 20 analysts from Tiger Brokers offering 12 month price targets for Best Buy Co in the last 3 months. The average price target is $77.76 with a high forecast of $94.00 and a low forecast of $63.00. The average price target represents a 5.55% change from the last price of $73.67.

Short-Term Trading Opportunities Post-Earnings

Trading Best Buy's stock after earnings carries a high degree of risk due to its volatility and the current uncertain retail landscape. The stock has a history of sharp moves following earnings reports.

Bullish Scenario: A beat on comparable sales and a better-than-expected outlook for the rest of the year could lead to a significant short-term rally. This could be driven by a narrative of the company successfully navigating a tough environment and its strategic initiatives starting to pay off.

Bearish Scenario: A miss on revenue or comparable sales, coupled with a cautious outlook, could lead to a steep decline. Given the stock's recent performance and the macroeconomic concerns, a disappointing report could trigger a "growth scare" and a sharp sell-off.

The market's reaction will be heavily influenced by the company's commentary on the health of the consumer and the effectiveness of its strategic pivots. Traders should be cautious and consider the stock's high volatility and the prevailing negative sentiment.

Technical Analysis - Exponential Moving Average (EMA)

Considering how BBY continue to stay positive on the momentum, we are seeing the bulls currently in control, but what might worries investors is the stock price is trading below 200-day period, so for long term, we might see BBY suffering a decline if the earnings result comes in with a weaker consumer demand and comparable sales drops.

But if we looked at how the consumer spending have been in the U.S., there is no significant signs of decline and most likely retailer like BBY might have factor in the tariff impact into the prices, in preparation for any tariffs across different product line, from what I see, BBY might make a price surge if the comparable sales came in stronger.

Summary

Best Buy (BBY) is facing a cautious outlook as it heads into its fiscal Q2 2026 earnings report on August 28, 2025. The company's performance is highly susceptible to consumer spending on discretionary items, which has been under pressure.

Analysts project Q2 revenue of approximately $9.23 billion and EPS of $1.22, both representing a year-over-year decline. The key metric to watch is comparable sales, which will signal the health of consumer demand. Gross margin is also critical, as it will reveal how effectively the company is managing costs and pricing in a competitive market.

The most important factor for investors will be Best Buy's guidance for the third quarter and the full fiscal year. Given the stock's recent volatility and a previous downward revision of guidance due to tariff concerns, a maintained or improved outlook could lead to a rally, while any further downward adjustment would likely trigger a sharp sell-off.

Appreciate if you could share your thoughts in the comment section whether you think BBY would be able to give a stronger comparable sales and also the impact of tariffs on BBY.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.