BBY, Best BUY Co., Inc.
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Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- Revenue is Domestic (92%) and International (8%).
- What moves the needle
- Sales per store and how fast inventory moves. What decides it: same-store sales, inventory turns, and whether thin margins survive a price war.
- Is it a good business?
- Return on capital has run high across the record (median 44%, above 15% in 10 of 10 years), though buybacks and expensed R&D and brands shrink the capital base, so the figure overstates the underlying economics. The steadier read is owner earnings: roughly 3% of revenue reaches owners as cash, consistently. High, durable returns can mark a moat, but whether this one is real pricing power or an accounting artifact is the judgment the 10-K is for.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →Domestic is 92% of revenue, so this is largely a single-segment business.
- Domestic92%$38.3B
- International8%$3.4B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2017–2026
realized figures from each filing, no estimates| 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | 2026’26 | TTMTTMMay 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $39.4B | $42.2B | $42.9B | $43.6B | $47.3B | $51.8B | $46.3B | $43.5B | $41.5B | $41.7B | $41.9B |
| Gross marginGross mgn | 24% | 23% | 23% | 23% | 22% | 22% | 21% | 22% | 23% | 22% | 23% |
| Operating marginOp. mgn | 4.7% | 4.4% | 4.4% | 4.6% | 5.1% | 5.9% | 3.9% | 3.6% | 3.0% | 3.3% | 3.7% |
| Net incomeNet inc. | $1.2B | $1.0B | $1.5B | $1.5B | $1.8B | $2.5B | $1.4B | $1.2B | $927M | $1.1B | $1.1B |
| EPS (diluted)EPS | $3.81 | $3.26 | $5.20 | $5.75 | $6.84 | $9.84 | $6.29 | $5.68 | $4.28 | $5.04 | $5.41 |
| Owner earningsOwner earn. | $2.0B | $1.5B | $1.6B | $1.8B | $4.2B | $2.5B | $894M | $675M | $1.4B | $1.3B | $1.6B |
| Owner earnings marginOE mgn | 5.0% | 3.4% | 3.7% | 4.2% | 8.9% | 4.9% | 1.9% | 1.6% | 3.4% | 3.0% | 3.8% |
| ROICROIC | 32% | 31% | 54% | 62% | 502% | 188% | 68% | 43% | 38% | 44% | 42% |
| Cash & investmentsCash+inv | $3.9B | $3.1B | $2.0B | $2.2B | $5.5B | $2.9B | $1.9B | $1.4B | $1.6B | $1.7B | $1.8B |
| Net debt / (cash)Net debt | ($2.6B) | ($2.3B) | ($592M) | ($958M) | ($4.2B) | ($1.7B) | ($698M) | ($282M) | ($424M) | ($562M) | ($483M) |
Owner’s Scorecard
Will it survive?
- Can it pay its interest? 29.6×ComfortableOperating income $1.4B ÷ interest expense $47M
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- ConservativeTotal debt $1.4B ÷ operating income $1.4B
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash +$373MNet cashCash $1.7B − debt $1.4B
Cash and short-term investments exceed every dollar of debt by $373M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Not enough data
The filing data didn't include the inputs for this check.
Is it a good business?
- ExceptionalNOPAT $1.1B ÷ invested capital $2.6B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- ThinOwner Earnings $1.3B = operating cash $2.0B − capex $704M
What an owner could take out without starving the business. That's 3% of revenue. Treating stock comp as the real expense it is (less $139M of SBC) leaves $1.1B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $2.0B ÷ net income $1.1B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns about halfDividends + buybacks $1.1B ÷ Owner Earnings $1.3B
Of $1.3B Owner Earnings, $1.1B (85%) went back to shareholders, $801M dividends, $273M buybacks. Net of $139M stock comp, the real buyback was about $134M. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 0.85×MaintainingCapex $704M ÷ depreciation $831M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2017–2026
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 10 of 10
Never lost money over the record, the earnings stability Graham insisted on.
- Return on capital ≥ 15% 10 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 5% (FY2017) → 3% (FY2026)
Margins held roughly steady across the record.
- Reinvestment, incremental ROIC returns capital
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
- Owner earnings growth −3%/yr
Free cash to owners shrank about 3% a year over the record.
- Worst year 2025 · 3.0% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Share count −4.6%/yr
The share count is shrinking, buybacks are quietly growing your slice of the business.
- Dividend record rising
Paid and raised the dividend across the record, the continuity Graham prized.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2017–2026
Over the record, the business generated $25.2B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a mature cash machine, most of what it earns goes straight back to owners.
- Reinvested$7.4B · 29%
- Dividends$6.4B · 25%
- Buybacks$11.2B · 44%
- Retained (debt / cash)$246M · 1%
It reinvested $7.4B (29%) back into the business and returned $17.5B (70%) to owners, $6.4B in dividends, $11.2B in buybacks. Total debt fell $39M across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- Stock-based compensation$139M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 10% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
3 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $41.7B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 1.11×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $1.4B vs $825M WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability PassA profit every year (10-yr record) · no losses
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record PassUninterrupted dividends · paid every year (10)
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth MissEarnings +33% over the record · −12%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $5.04/share and book value $13.97/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Best BUY Co., Inc. has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $1.6B on 211M diluted shares; net cash $483M. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2026
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Pricing power & competitionRisk Factors
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“Operational factors, such as failure to deliver high quality services, offer competitive pricing, or meet delivery promises could damage our reputation.”
From the recordOperating margin3.7% now (TTM), off a 5.9% peak (FY2022) - Concentrated dependenceRisk Factors
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Our revenue and profitability depend on the continued growth of demand for the products and services offered by us, and our business is affected by general economic and business conditions worldwide.”
From the recordOwner-earnings margin at stake (TTM)4% - Debt terms & refinancingMD&A
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“If an event of default were to occur with respect to any of our other debt, it would likely constitute an event of default under the Five-Year Facility Agreement as well.”
From the recordBalance sheet (TTM)+$373M net cash · interest covered 29.6× - Litigation & contingenciesRisk Factors
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“Moreover, unsettled laws regarding retailer responsibility for product liability and intellectual property claims related to third-party products sold on marketplace platforms compound our marketplace risk.”
A judgment, not a number, weigh it against the filing yourself. - Regulation & policyMD&A
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“During fiscal 2026, U.S. tariffs were imposed under the International Emergency Economic Powers Act (the "IEEPA") that applied to certain imported private label branded and direct import products that we sold during the year or held in inventory as of the end of the fiscal year.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2026 vs FY2025
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “Domestic segment adjusted SG&A decreased slightly in fiscal 2026, primarily due to lower Best Buy Health expenses, lower depreciation and favorable fiscal 2026 indirect tax resolutions, mostly offset by increased expenses in support of our Best Buy Ads and Best Buy Marketplace initiatives, including…”
- “Such assumptions can include complex and uncertain external factors, such as changes in tax law, interpretations of tax law and the timing of such changes, and uncertain internal factors such as taxable earnings by jurisdiction, the magnitude and timing of certain transactions and capital spending.”
- “During fiscal 2026, U.S. tariffs were imposed under the International Emergency Economic Powers Act (the "IEEPA") that applied to certain imported private label branded and direct import products that we sold during the year or held in inventory as of the end of the fiscal year.”
- “In fiscal 2026, we generated $41.7 billion in revenue, compared to $41.5 billion in fiscal 2025, and our comparable sales grew 0.5%, primarily driven by comparable sales growth in computing and mobile phones, partially offset by comparable sales declines in home theater and appliances.”
- “We could be subject to heightened regulatory investigations, penalties and fines if a cybersecurity event or privacy violation is related to data or sensitive personal information that is regulated by laws such as, for example, the Health Insurance Portability and Accountability Act (HIPAA), the Per…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, nearest by economic model
No close industry peers in the catalog yet, so these are the nearest by economic model (retail & distribution), compared on owner economics. Don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| TJXThe TJX Companies, Inc. | $60.4B | 31% | 7.9% | 53% | 8% |
| DGDollar General Corp | $42.7B | 31% | 5.2% | 14% | 6% |
| BBYBest BUY Co., Inc. | $41.7B | 22% | 3.3% | 41% | 3% |
| SBUXStarbucks Corporation | $37.2B | 77% | 7.9% | 143% | 7% |
| MCDMcdonald’s Corporation | $26.9B | — | 46.1% | 26% | 27% |
| SHWTHE Sherwin-williams Company | $23.6B | 49% | 17.7% | 23% | 11% |
| ROSTRoss Stores, Inc. | $22.8B | 28% | 11.9% | 66% | 10% |
| DLTRDollar Tree, Inc. | $19.4B | 36% | 8.5% | 23% | 8% |