What happened

Week to date, shares of Best Buy (BBY 1.41%) were up 15.6% as of 10:31 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence. Earlier in the week, Best Buy reported a decline in sales and profits, but its fiscal first-quarter results were better than investors had expected, considering the inflation and supply chain problems across the economy. 

Given the stock's low valuation and high dividend yield entering the quarter, investors took the news as a good reason to scoop up shares at a discount. Year to date, the stock is down 18%. Best Buy's below-average price-to-earnings ratio of 9.6 and above-average dividend yield of 3.58% look attractive in this environment. 

So what

Other retailers also released better-than-expected results this week, specifically Williams-Sonoma and Macy's. While home goods and high-end luxury are still showing healthy sales increases for Williams-Sonoma and upscale department stores, people are holding back on electronics. Best Buy sales declined 8.5% year over year, with adjusted earnings per share falling to $1.57 from $2.23 in the year-ago quarter. 

Best Buy CEO Corie Barry said, "Macro conditions worsened since we provided our guidance in early March which resulted in our sales being slightly lower than our expectations." Barry added that these trends have carried over into the fiscal second quarter. The company lowered its sales and profit guidance accordingly.

But investors were expecting much worse, and given the stock's very cheap valuation, the stock jumped on the news.

A red arrow pointing down and a green arrow pointing up.

Image source: Getty Images.

Now what

Long-term investors should appreciate Best Buy's attractive dividend yield. The company has raised the quarterly dividend payment by 140% over the last five years. The high yield is nice to have in a year where management expects comparable store sales to decline between 3% to 6%. By fiscal 2025, management is calling for revenue and operating income to grow beyond the levels achieved last year.