If You Invested $1000 in Best Buy a Decade Ago, This is How Much It'd Be Worth Now
For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.
What if you'd invested in Best Buy (BBY) ten years ago? It may not have been easy to hold on to BBY for all that time, but if you did, how much would your investment be worth today?
Best Buy's Business In-Depth
With that in mind, let's take a look at Best Buy's main business drivers.
Incorporated in 1966 and headquartered in Richfield, MN, Best Buy Company Inc. (BBY) is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, health, security, appliances and related services. The company retails technology products in the United States and Canada.
Best Buy operates through two business segments. The Domestic Segment (95.8% of Q3FY23 total revenues) is comprised of the operations, including Best Buy Health business, in all states, districts and territories of the United States under various brand names Best Buy, Best Buy Business, Best Buy Express, Best Buy Health, CST, Geek Squad, GreatCall, Lively, Magnolia and Pacific Kitchen and Home. The International Segment (4.2% of Q3FY23 total revenues) comprised operations in Canada under the brand names Best Buy, Best Buy Express, Best Buy Mobile and Geek Squad.
Domestic and International segments have offerings in six revenue categories.
Computing and Mobile Phones - computing (including desktops, notebooks and peripherals), mobile phones (including related mobile network carrier commissions), networking, tablets (including e-readers) and wearables (including smartwatches);
Consumer Electronics - digital imaging, health and fitness, home theater, portable audio and smart home;
Appliances - including dishwashers, laundry, ovens, refrigerators, blenders, coffee makers and vacuums;
Entertainment - drones, gaming, movies, music, toys, virtual reality and other software;
Services - consultation, delivery, design, health-related services, installation, memberships, repair, set-up, technical support and warranty-related services; and
Other - beverages, snacks, sundry items and other product offerings.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Best Buy, if you bought shares a decade ago, you're likely feeling really good about your investment today.
A $1000 investment made in January 2013 would be worth $6,036.59, or a 503.66% gain, as of January 16, 2023, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 171.67% and gold's return of 9.90% over the same time frame.
Going forward, analysts are expecting more upside for BBY.
Shares of Best Buy have outperformed the industry in the past three months. Management focuses on improving the digital capabilities including boosting its omni-channel services, such as buy online and pickup in store services. The company is also making a significant headway in the health space. However, a challenging operating environment and increased promotional backdrop in the consumer electronics industry remain concerns. Hence, the company posted soft results in third-quarter fiscal 2022, with the top and the bottom lines declining year over year, but both metrics beat the Zacks Consensus Estimate. Further, sales declined across both the Domestic and International segments in the quarter. Enterprise comparable sales dropped 10.4% and margins were also weak. For the fiscal fourth quarter, management expects comparable sales to fall 10%.
Over the past four weeks, shares have rallied 7.93%, and there have been 12 higher earnings estimate revisions in the past two months for fiscal 2023 compared to none lower. The consensus estimate has moved up as well.
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