Best Buy’s share price has gained 13.9% over the past year. With the stock now around US$77, the key tension for investors is whether that steady climb is still supported by the current valuation checks.

• The 13.9% 1 year return suggests the recent share price recovery has been meaningful, so buyers today are no longer looking at a deeply depressed stock.
• Growth in higher margin services and technology upgrades can support earnings expectations, while leadership changes and cautious consumer spending remain important overhangs for how confidently the market prices Best Buy.
• On Simply Wall St’s broader valuation framework, Best Buy screens as attractively priced in 5 of 6 checks. This indicates the overall picture still leans cheap rather than fully priced.

The issue now is whether that “leans cheap” verdict is strong enough to justify Best Buy’s recent run or whether the easy valuation upside has already been taken.

Is Best Buy Still Cheap on Earnings?

The P/E ratio is a useful way to look at Best Buy because earnings remain a central focus for how investors judge this retailer’s progress. At around 14.2x earnings, Best Buy trades well below the Specialty Retail industry average of about 19.7x and also sits under the broader peer group average of roughly 26.1x.

On Simply Wall St’s model, a P/E of about 16.7x would be more in line with what you might expect for Best Buy once factors like its margins, growth profile and risk are accounted for. The current multiple therefore points to a discount against that tailored fair ratio. Despite recent positive news around services growth, RGB TV exclusivity and the Meta partnership, the stock’s earnings multiple still leaves room before it reaches either the industry average or that fair-value mark.

On the P/E measure, Best Buy stock currently screens as undervalued versus both its sector and a more tailored fair multiple.

The Best Buy Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for Best Buy pick up where the valuation checks stop. They spell out which paths for Best Buy's future growth, margins and earnings would need to play out for the stock to be worth meaningfully more or less than today's price, based on scenarios shared on the Community page. Where a single ratio or model gives one neat figure, Narratives unpack the future that figure rests on so you can monitor whether those assumptions still hold over time.

The community is split on Best Buy, with one camp leaning into the replacement cycle and new profit streams while the other worries about tariffs and big ticket demand.

Bull case: 14% undervalued

"The launch and scaling of new profit streams like the Best Buy Marketplace and Best Buy Ads are anticipated to boost the company's gross profit margins by expanding their product assortment without holding inventory, as well as leveraging advertising capabilities to drive higher-margin revenue…"

Bear case: 28% overvalued

"The impact of new tariffs announced by the U.S. government could potentially increase prices for Best Buy's products, leading to a 1% headwind on comparable sales, which would put pressure on revenue and net margins…"

Do you think there's more to the story for Best Buy? Head over to our Community to see what others are saying!

The Bottom Line

Best Buy still screens as undervalued on earnings, with its P/E sitting below both sector averages and a more tailored fair multiple. That suggests the market is not fully pricing in what the business currently delivers, even after the past year’s share price recovery. From here, the key question is whether higher margin services and new profit streams can offset pressures from tariffs and big ticket demand so that the existing discount reflects opportunity rather than a value trap.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.