Best Buy Stock Soars 10% Despite Q4 Miss As Traders Look To Optimism

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Ollie Martin
Updated: 3 Mar 2022

Key points:

  • Popular retailer misses earnings expectations for popular Q4 holiday period
  • BBY stock rallied as much as 10% in Thursday premarket trading following promising outlook
  • Supply chain issues impacted the availability of popular holiday items that drive revenue
  • The retailer announced a quarterly dividend increase of 26%

Best Buy (NYSE: BBY), a staple of US consumer goods, reported its Q4 earnings before the opening bell this morning. In what could have easily been interpreted as a straightforward earnings miss, BBY stock rallied up to 10% in premarket as investors latched on to a seemingly promising future. We never quite know how the market will react to earnings; sell-offs can perpetuate strong revenue increases and similarly, rallies can follow lackluster growth. 

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For Best Buy investors, Q4 is often the most anticipated time of the year as shoppers flock to stores for increased holiday spending. However, Best Buy fell victim to the deafening amalgam of inflation, supply chain issues, and Omicron-related noise; spurring staffing shortages and limited popular items.

Inevitably, as Omicron marks the potential end of troublesome variants, Covid-facilitated spending will also drop off – meaning Q4 is illustrative of a bounce from abnormal spending patterns before realigning with pre-pandemic growth expectations. 

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The company’s Q4 adjusted EPS came in at $2.73, matching the Wall Street consensus of $2.73. It was revenue where the company slightly lacked, posting $16.37B vs $16.6B expected. Looking at the basics numbers, Best Buy didn’t miss the mark by much, but as is well known – it doesn’t take a whole lot for the market to throw the stock into the red. 

Looking at the rosier outlook, Best Buy hit its fastest ever holiday delivery times, and executives made particular reference in prevalent growth areas in the company’s membership program, Totaltech, and health sector. At a time when supply chain issues are wreaking havoc amongst retailers and consumer businesses, Best Buy hasn’t come off too badly.

In a final bid to win the hearts of investors, the company also announced it will be increasing its quarterly dividend by 26%, announcing a planned share buyback spend of $1.5B over the coming year. 

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