Best Buy

Methodology

Best Buy's consumer electronics retail business faces structural challenges from e-commerce competition and declining physical store relevance, making earnings less predictable. The company's pivot toward services, memberships, and omnichannel fulfillment has stabilized results better than expected. This calculation is moderately reliable for Best Buy's current steady-state, though consumer electronics replacement cycles and Amazon competition create ongoing uncertainty about long-term growth sustainability.

Methodology

Best Buy's PEG ratio often appears attractive (1.0-2.0) reflecting skepticism about the long-term viability of big-box electronics retail in an Amazon-dominated world. The company's better-than-expected resilience and services expansion justify higher multiples than distressed retailers, but limited growth runway caps valuations. A low PEG may signal value if Best Buy sustains its showrooming defense, or appropriately reflect structural retail challenges.

Methodology

Best Buy's dividend yield (typically 3.0-5.0%) is substantial and represents a key component of the investment thesis for a mature retailer with limited growth. The company's strong free cash flow generation despite competition supports both dividends and significant share buybacks. PEGY is essential for properly valuing Best Buy, where high yield combined with modest or flat growth creates a total return profile more attractive than the growth metrics alone suggest.