Best Buy Validates Their Turnaround Story

It was just six months ago that I wrote about Best Buy,

Best Buy's prices weren't competitive. Customers would go to the store, touch and feel the product, then buy it online. So Best Buy implemented a price-matching policy, both in-store and online, while also lowering its prices to be more competitive.

Best Buy started shipping directly from the stores with the store employees packing and shipping online orders which gave customers access to more product and inventory and reduced shipping time and cost.

Hubert Joy expanded Best Buy’s services, which included an in-home advisory service. Consumers got a free consultation on how to connect all the products in their homes, including TVs, computers, video games, thermostats and home-security networks, etc. which led to consumers buying more products or services.

These changes, along with the recent acquisition, not only saved Best Buy's existence, but put them in a position to compete with Amazon.

Best Buy announced their earnings this past week. Despite fourth-quarter revenue fell year-over-year, the crucial metric, same-store sales rose 3%. Lastly, Best Buy provided positive forward guidance which is always an investor’s fan favorite. Best Buy sees same-store sales growth of 0.5% to 2.5% and revenue growth of 1.2% and EPS growth of 4.3%.

Based on the great fourth quarter and positive 2019 guidance, I think it’s safe to say Best Buy executed when their backs were against the wall. I also think what Best Buy accomplished should be studied by other companies…that if they want to survive in an Amazon world.

However, I think the opportunity to buy Best Buy train already left the station. The time to buy Best Buy was when price dipped down along with the equity markets in the 4th quarter of 2018.

But why did price stop there?

Price found buyers at the weekly demand at $48.50.

So where is price heading next, not sure...not sure if price will fill the gap or move higher to the daily supply at $82.50. Thus, the chart suggest to stay put and look for other opportunities thus far.