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Best BUY (BBY): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q2 FY27, to Aug 1, 2026, filed Sep 4, 2026; rules v1.1
Best BUY (BBY): 0 rules of 10 triggered on the filings to Aug 1, 2026. 2 to review; 2 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
Adjusted profit = economic profit To review · confidence low
Adjusted EPS was 10% or more above GAAP in 1 of the last 3 quarters: read the reconciliation before taking the adjusted figure.
A precise DCF value = the true value To review · confidence high
The DCF's point value is 85.85 a share (price 99.40); 70% of it is the terminal value, a number about years no one has seen. Moving operating margin by ±3 pts alone takes it from 26.29 to 145.41; across every method the research ran the range is -121 to 1,391. The value is a range; the decimals are not information.
Innocent reading: A stable, mature business with a narrow range of outcomes, where the point value is a fair summary.
Every rule
A01 FCF growth = the business improved Not triggered confidence high
Free cash flow did not rise ($1.4B → $1.3B): the trap does not arise.
The figures and how they are read
| Fiscal year before | FY25 |
| Fiscal year | FY26 |
| Operating cash flow, year before | $2.1B |
| Operating cash flow | $2.0B |
| Capex, year before | $706M |
| Capex | $704M |
| Free cash flow, year before | $1.4B |
| Free cash flow | $1.3B |
| Change in FCF | −$134M |
| Change in capex | −$2M |
| Working capital: change in its cash contribution | −$280M |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY26 (cash flow statement, fiscal year) · FY25 (cash flow statement, fiscal year before)
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 0.3% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY26 |
| Stock compensation | $139M |
| Revenue | $41.7B |
| SBC / revenue | +0.3% |
| Buybacks | $273M |
| Buybacks / SBC | 2.0 |
| Diluted shares, year before | 216.6M shares |
| Diluted shares | 212.1M shares |
| Diluted shares: change | -2.1% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY26 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Not triggered confidence medium
Receivables grew 1% against revenue 4% in Q2 FY27; DSO 9 against a median of 9: collections are keeping pace with sales.
The figures and how they are read
| Quarter | Q2 FY27 |
| Revenue, year over year | +3.6% |
| Receivables, year over year | +0.5% |
| Quarter before | Q1 FY27 |
| Revenue y/y, quarter before | +1.9% |
| Receivables y/y, quarter before | +21.8% |
| Days sales outstanding | 8.5 |
| DSO, median of eight quarters | 8.7 |
| Receivables | $922M |
| Revenue | $9.8B |
receivables and revenue against the same quarter a year earlier; DSO = receivables / quarterly revenue × days, against the median of the eight quarters before
Source: Q2 FY27 (receivables and revenue) · Q2 FY26 (the same quarter a year earlier)
B08 Adjusted profit = economic profit To review confidence low
Adjusted EPS was 10% or more above GAAP in 1 of the last 3 quarters: read the reconciliation before taking the adjusted figure.
The figures and how they are read
| Quarter / adjusted EPS / GAAP EPS / gap | 2025-10-31 / 1.4 / 0.66 / 0.529; 2026-04-30 / 1.28 / 1.31 / -0.023; 2026-07-31 / 1.47 / 1.48 / -0.007 |
| Quarters with adjusted ≥ 10% above GAAP | 1 |
| Quarters compared | 3 |
| Latest gap | -0.7% |
the analysts' 'actual' (usually the company's adjusted EPS) against GAAP net income ÷ diluted shares for the matching quarter; a gap of 10% or more counts (the stand-in until three releases' reconciliation tables are on file)
Source: 2025-10-31 (adjusted 1.40 vs GAAP 0.66) · 2026-04-30 (adjusted 1.28 vs GAAP 1.31) · 2026-07-31 (adjusted 1.47 vs GAAP 1.48)
What would show the trap does not apply
- The reconciliation shows the excluded items ending (a restructuring with its final charge, a settlement paid) and the gap to GAAP closes in the next quarters
- The excluded items are only amortisation of acquired intangibles and the cash paid for the deals is in the investing cash flow
Look again: next filing.
C02 Low net debt = no refinancing risk Not triggered confidence medium
Nothing comes due within a year; net debt is −$1.1B.
The figures and how they are read
| Cash and investments | $2.3B |
| Debt | $1.2B |
| Net debt | −$1.1B |
| Due within a year | 0 |
| Read from | the debt maturity table |
| Free cash flow, twelve months | $1.8B |
| Cash plus free cash flow | $4.0B |
| Coverage of what is due | — |
| Due in the second year | 0 |
| Balance sheet date | 2026-08-01 |
due within a year from the maturity table (else the current portion of debt), against cash and investments plus free cash flow over the last twelve months (zero if negative); no credit lines assumed
Source: FY25 (debt maturities, cash and investments)
D03 EPS growth = profit growth Not triggered confidence high
EPS rose 69% and net income rose 69% in Q2 FY27; the share count rose 0.3%: EPS growth follows profit growth.
The figures and how they are read
| Quarter | Q2 FY27 |
| Quarter before | Q2 FY26 |
| EPS, year before | $0.88 |
| EPS | $1.48 |
| Net income, year before | $186M |
| Net income | $315M |
| Diluted shares, year before | 212.0M shares |
| Diluted shares | 212.7M shares |
| EPS growth | +68.9% |
| Net income growth | +69.3% |
| Diluted shares: change | +0.3% |
| eps from profit | $0.61 |
| eps from share count | $0.00 |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q2 FY27 (net income, diluted shares, EPS) · Q2 FY26 (the same quarter a year earlier)
E02 Low P/E at a cyclical peak = undervalued Not triggered confidence medium
Net income of $1.3B is not at a cyclical high against the last eight years (median $1.5B, best $2.5B): the P/E of 16.7× is on a normal year.
The figures and how they are read
| market value | $21.1B |
| net income ttm | $1.3B |
| pe ttm | 16.70 |
| net income median fy | $1.5B |
| pe mid cycle | 14.40 |
| net income peak fy | $2.5B |
| years | FY19 / 1464.0; FY20 / 1541.0; FY21 / 1798.0; FY22 / 2454.0; FY23 / 1419.0; FY24 / 1241.0; FY25 / 927.0; FY26 / 1069.0 |
| down years in window | 3 |
P/E on the trailing twelve months' net income against the P/E on the median net income of the last eight fiscal years (a mid-cycle stand-in); 'at a peak' = this year's profit at or above 90% of the best year and at least 1.3× the median
Source: Q2 FY27 (net income, trailing twelve months)
E07 A precise DCF value = the true value To review confidence high
The DCF's point value is 85.85 a share (price 99.40); 70% of it is the terminal value, a number about years no one has seen. Moving operating margin by ±3 pts alone takes it from 26.29 to 145.41; across every method the research ran the range is -121 to 1,391. The value is a range; the decimals are not information.
The figures and how they are read
| dcf value | 85.85 |
| price | 99.40 |
| terminal value share | +70.2% |
| swing by input | Operating margin / ±3 pts / 26.29 / 145.41; Revenue growth (each year) / ±5 pts / 73.61 / 100.54; WACC / ±1 pt / 75.81 / 99.32; Capex (share of revenue) / ±1 pt / 77.82 / 93.88 |
| range all methods | -121.31; 1391.29 |
the DCF's point value against the share of it that is the terminal value and the value at each input moved by one step (growth ±5 pts, WACC ±1 pt, margin ±3 pts …); the range across every method the research ran
Source: 2026-11-08 (valuation research)
What would explain it innocently
- A stable, mature business with a narrow range of outcomes, where the point value is a fair summary
- The inputs that matter most are themselves well known (a regulated return, a long contract)
What to look for in the filing
- Which input you believe differs from the research's and why
- What the price implies for growth (the reverse DCF on the fair-value page)
What would show the trap does not apply
- The DCF's value is robust to the terminal growth and discount rate (the range's low end is still above the price)
- The company's cash flows over the next three years track the DCF's early years
Look again: next filing.
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → Best BUY: cash flow → Earnings quality score →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.