Key Takeaways:
- Best Buy is capitalizing on computing upgrades, gaming demand, and new revenue streams through its marketplace and advertising business.
- BBY stock could reasonably reach $105 per share by January 2028, based on our valuation assumptions.
- This implies a total return of 30% from today’s price of $81, with an annualized return of 13% over the next 2.2 years.
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Best Buy (BBY) is strengthening its position as the trusted destination for technology through strategic omnichannel experiences, vendor partnerships, and new profit streams, including its recently launched marketplace and Best Buy Ads platform.
The electronics retailer serves customers through 1,000+ stores and digital platforms, offering everything from computing and gaming to appliances and mobile phones, supported by Geek Squad services and expert in-store experiences.
Core offerings include computing devices, gaming consoles and accessories, mobile phones through carrier partnerships, home theater systems, appliances, and services ranging from installation to technical support.
The company delivered third-quarter fiscal 2026 revenue of $9.7 billion, up 2.4% year-over-year, with comparable sales growth of 2.7%, marking the best growth in over four years despite challenges in categories such as home theater and appliances.
Best Buy grew comparable sales in computing for the seventh consecutive quarter, achieved 3.5% online growth, and launched its third-party marketplace with over 1,000 sellers and 11x more SKUs in just three months.
Over the last 10 years, BBY stock has returned close to 270% to shareholders, after dividends are adjusted. Despite these outsized gains, BBY stock is down 41% from its all-time highs, giving you an opportunity to buy the dip.
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What the Model Says for Best Buy Stock
We analyzed the upside potential for Best Buy stock using valuation assumptions based on its omnichannel strengths and emerging profitability streams, including marketplace and advertising revenue.
Analysts recognize an opportunity ahead for Best Buy, given its proven execution in computing and gaming, strategic vendor partnerships, and early success launching marketplace and advertising platforms that create new profit pools.
Best Buy’s diversified strategy provides multiple growth vectors. The computing category continues momentum from Windows 11 upgrades and AI-enabled devices, while the new marketplace already shows healthy unit economics with return rates below first-party levels.
Based on estimates of 1.4% annual revenue growth, 4.5% operating margins, and a normalized P/E multiple of 11.8x, the model projects Best Buy stock could rise from $81 to $105 per share.
That would be a 30% total return, or a 13% annualized return over the next 2.2 years.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for Best Buy stock:
1. Revenue Growth: 1.4%
Best Buy delivered strong third-quarter performance with comparable sales growth of 2.7%, significantly exceeding expectations of 1.6%. This followed the monthly performance of roughly 3% in August, 1% in September, and 5% in October.
Growth was driven by computing (seventh consecutive quarter of positive comps), gaming (Nintendo Switch 2 demand), and mobile phones (expanded carrier partnerships). These categories more than offset declines in home theater and appliances.
Computing strength reflects customers’ need to replace and upgrade devices, particularly as Microsoft ended Windows 10 support in mid-October. Desktop sales surged almost 30% year-over-year. The company also saw strong back-to-school performance across multiple price points.
Gaming benefited from Switch 2 launch momentum and handheld gaming devices like ASUS ROG Ally. Mobile phone growth came from improved in-store operating models with major carriers.
Management expects fourth-quarter comparable sales between negative 1% and positive 1%, with the high end supported by continued computing, gaming, and mobile growth plus improved TV trends from competitive pricing and enhanced delivery offerings.
The marketplace launch adds significant SKU depth in high-unit categories like accessories and small appliances, with customer return rates lower than those in first-party business. Best Buy Ads continues expanding with new in-store takeover products and self-serve platform capabilities.
We used a 1.4% forecast, reflecting Best Buy’s ability to capture technology upgrade demand and scale new revenue streams, balanced against macroeconomic pressures and category-specific headwinds in appliances and home theater
2. Operating margins: 4.5%
In the third quarter, Best Buy achieved an adjusted operating income rate of 4%, up 30 basis points year-over-year, driven by better-than-expected revenue and lower SG&A expenses.
It reported improved gross profit rate contributions from both marketplace and Best Buy Ads in Q3, with similar benefits expected in Q4. However, management continues investing in technology and talent to scale these platforms, resulting in a neutral operating income rate impact for fiscal 2026 compared to last year.
SG&A efficiency improved significantly, with adjusted SG&A declining $4 million despite higher incentive compensation. It achieved this through operational improvements, including AI-powered customer support (driving 17% fewer contacts), data-driven fulfillment optimization, and expanded vendor partnerships.
Best Buy targets sustainable margin improvement through several initiatives: scaling marketplace commission revenue, growing Best Buy Ads collections (already highly profitable), leveraging approximately 20% higher vendor labor investment year over year, and driving operational efficiencies through AI and automation.
For fiscal 2026, management expects full-year operating margins of approximately 4.2%, with fourth-quarter margins between 4.8% and 4.9%. The company continues to balance near-term investments in growth initiatives with long-term profitability improvements.
We forecast 4.5% operating margins, reflecting management’s proven ability to drive operational leverage while making strategic investments in the marketplace, advertising, and technology platforms that should drive rate expansion over time.
3. Exit P/E Multiple: 12x
Best Buy stock currently trades at a next-twelve-months P/E multiple of 12.2x, reflecting its consistent execution, strategic positioning in technology retail, and emerging high-margin revenue streams.
Historical P/E multiples show the stock has averaged 11.8x over the past year, 12.4x over three years, 12.4x over five years, and 12.9x over the past decade, demonstrating relatively stable valuations through various market cycles.
We maintain a 12x exit multiple given Best Buy’s track record of navigating technology transitions, its strengthening competitive position through vendor partnerships and immersive store experiences, and the long-term profit potential from marketplace and advertising businesses.
The company’s omnichannel model continues resonating with customers, evidenced by improved Net Promoter Scores, growing app usage, and strong in-store pickup rates of 46% despite shipping speed improvements.
Best Buy’s disciplined capital allocation includes returning $802 million to shareholders year-to-date through $602 million in dividends and $200 million in share repurchases, with approximately $300 million in total buybacks expected for fiscal 2026.
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What Happens If Things Go Better or Worse?
Different scenarios for Best Buy stock through 2030 show varied outcomes based on execution across technology upgrade cycles and new profit streams: (these are estimates, not guaranteed returns):
- Low Case: Computing upgrade cycle stalls and marketplace scaling disappoints → 10% annual returns
- Mid Case: Steady technology replacement demand and successful platform growth → 13% annual returns
- High Case: Strong AI device adoption and advertising revenue acceleration → 16% annual returns
Even in the conservative case, Best Buy stock offers positive returns supported by its defensive positioning, consistent dividend payments, and operational discipline.
The upside scenario for BBY stock could deliver exceptional performance if the company successfully captures multi-year computing and mobile upgrade cycles driven by AI innovation while achieving meaningful scale in marketplace GMV and advertising collections that expand operating margins beyond historical ranges.
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How Much Upside Does Best Buy Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
