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Options Corner: Use This 'Cheat Code' To Play The Potential Best Buy Recovery

To little surprise, big-box retailing giant Best Buy Co Inc (NYSE:BBY) has been one of the worst-hit entities due to President Donald Trump's trade policies, especially surrounding tariffs. As Reuters mentioned earlier this year, approximately 60% of the retailer's total annual cost of goods sold is exposed to China. Combined with broader economic challenges, BBY stock appears to be a poor investment. Still, contrarians may want to keep it on their radar.

Let's keep this on the real: there's a legitimate reason why BBY stock is one of the biggest losers in the trailing five sessions, down about 8%. It's also a stain on the broader market recovery narrative. Since the beginning of the year, BBY is down more than 22%, a sharp contrast to the S&P 500 index's gain of over 6% during the same frame. The negative catalyst can be traced to financial underperformance.

In the company's first-quarter 2026 earnings report, the headline numbers fell short of expectations. Revenue declined by around 1% against the year-ago quarter to $8.77 billion, missing the consensus view of $9.22 billion. Also, earnings per share landed at 95 cents, down from $1.14 one year prior, as well as missing the consensus target by 11%. The fallout has contributed to analysts downgrading BBY stock.

Still, it is worth noting that Best Buy has been focusing on higher-margin initiatives. Therefore, looking strictly at comps, which have been declining, may not provide the full picture. For example, the retailer's domestic gross profit increased to 23.5% last quarter versus 23.4% in the year-ago period. This higher rate largely stemmed from the company's services category.

Now, does the focus on higher-margin efforts eliminate all of Best Buy's problems? No. But the point is that the negativity may be more than ...