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As a value investor, one of the types of stocks you must learn to identify are value traps. These are stocks that look cheap but whose businesses are stuck and therefore the stock price is too.

I personally like Best Buy (BBY) which reported 2QFY26 earnings this morning. I’m technologically unsophisticated so when I need a new laptop or printer, I go to BBY, ask the floor person what he recommends and make a selection. But for more sophisticated buyers, BBY has become the showroom for online purchases.

BBY’s comps are stabilizing this year with guidance of -1.0% to +1.0% for FY26 (ending January 31, 2026). But that comes after three years of massive declines: -2.3% (FY25), -6.8% (FY24) and -9.9% (FY23). Too many people are now buying the stuff BBY sells online or elsewhere.

BBY is guiding FY26 EPS to $6.15-$6.30. That’s only 11x the stock price and they pay a 5.35% dividend. The problem is FY25 and FY24 EPS were $6.37 and FY23 $7.08. In other words, earnings have stagnated and since stock prices follows earnings over the long term it’s not likely to go anywhere either. A look at BBY’s 5 year chart shows that to be the case.

For many years BBY was the leading electronics retailer where most Americans went to buy electronics. But in the age of Amazon, that has changed and the stock has become a value trap.

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