What happened:

Shares of electronics retailer Best Buy (NYSE:BBY) rose 16.6% in the morning after the company reported second-quarter results. Revenue narrowly beat expectations, while earnings per share comfortably beat expectations. The company observed signs of stabilizing demand and, as a result, raised its non-GAAP earnings per share guidance for the coming full year (above expectations). Overall, this quarter had some important positives.

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What does the market tell us:

Best Buy shares are somewhat volatile, having experienced two swings of over 5% in the last year. But swings this big are very rare, even for Best Buy, and that suggests to us that this news had a significant impact on the market’s perception of the company.

The biggest move we wrote about last year came three months ago, when the stock rose 12% on news that the company reported first-quarter results that beat analysts’ expectations for gross margin and earnings per share.

On the other hand, revenues fell short of expectations as comparable-store sales fell more than expected (a 6% decline versus an estimated 5% decline). However, the forecast was more encouraging: the CFO acknowledged that the business was already trending toward the midpoint of the annual comparable sales forecast.

Furthermore, the profitability update was even more impressive, with the company adding, “We expect profitability at the high end of our non-GAAP operating profit rate guidance due to a higher gross profit rate on our membership and service offerings.” Looking at the whole thing, we think this was still a decent, albeit mixed, quarter that shows the company remains on track.

Best Buy is up 30.4% year-to-date and has hit a new 52-week high of $100.98 per share. Investors who bought $1,000 worth of Best Buy stock 5 years ago would have an investment worth $1,590 today.

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