Best Buy's Profits Are Growing. Is the Beaten-Down Retailer a Buy in 2026?

Best Buy (NYSE: BBY) stock is coming off a rough year in 2025 when its share price fell a whopping 22%. Investor concerns around sluggish sales growth and uncertainty around the economy were weighing down its valuation.

This year was also looking like it might be a challenging one for the retailer. However, Best Buy surprised investors with some solid numbers in its latest earnings report, and the retail stock has been jumping on the results -- it's now up around 1% for the year. Could this be a great time to add Best Buy's stock to your portfolio?

Image source: Getty Images.

Earnings were mixed, but profits were up big

On Tuesday, Best Buy released its fourth-quarter earnings numbers for the period ending Jan. 31. Its revenue totaled $13.8 billion and was down around 1% from a year ago, coming in slightly below analyst expectations of around $13.9 billion. The big surprise, however, came on the bottom line, with the company's net earnings totaling $541 million -- up significantly from $117 million in the same period last year. Its adjusted per-share profit of $2.61 was also far higher than the $2.47 in per-share earnings that Wall Street was looking for.

While the company's gross profit margin was the same, its selling, general, and administrative expenses declined by 2% and Best Buy also didn't incur impairment charges this past quarter, which totaled $475 million in the prior-year period. Those were the main reasons for the improved bottom line.

The bigger question remains growth. Its comparable sales for the past quarter were down 0.8%, and that's a key metric that investors look at since it only considers stores that were open a year ago, and thus, gives a good indication of the company's true organic growth. For the current fiscal year, Best Buy projects its comparable growth rate to range between a decline of 1% and an increase of 1%.

Is Best Buy's stock due for a rally?

Best Buy's stock looks cheap, trading at a forward price-to-earnings multiple of around 10. Investors have been discounting it due to the uncertainty ahead. And with tariffs still potentially weighing on its business and there being looming question marks around its future growth, I wouldn't rush out to buy Best Buy's stock today.

There's still ample risk with the stock, and while it may seem cheap, a discount is warranted given the company's challenges. It has struggled to grow in recent years, and until that changes or there's a catalyst that can give investors more confidence going forward, I'd take a wait-and-see approach with the retail stock, as any boost it gets from earnings may not last.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Best Buy. The Motley Fool has a disclosure policy.