Among the retail stocks many investors are focusing on, Best Buy (NYSE:BBY) has been one of the best performers today. Still up approximately 2% at the time of writing, BBY stock actually surged more than 7% at today’s high following the company’s earnings release.

Now, Best Buy’s earnings weren’t necessarily outstanding. Revenue dropped 13% in the second quarter, as the company saw weaker demand for consumer electronics. Much of this has been blamed by the company on inflation-related woes. After all, when consumers have to choose between buying food and gas or another entertainment-related gadget, the choice is often simple.

That said, Best Buy did beat on its bottom line, bringing in $1.54 in adjusted earnings compared to estimates of $1.27. That’s a substantial beat that investors clearly are cheering right now.

Additionally, given the company’s previous guidance cut in July, Best Buy’s revenue numbers also came in better than the Street expected. Commentary from the company around its plan to manage through this difficult time also seems to have struck a positive chord with investors.

Let’s dive more into what to make of Best Buy’s most recent earnings.

Is BBY Stock a Buy Following Earnings?

Such a significant year-over-year revenue decline alongside a much larger-than-expected bottom-line beat is something the market is clearly finding difficult to digest. Indeed, BBY stock has given up most of this morning’s gains as macro forces continue to plague the entire market.

However, these results can certainly be taken positively by most investors. Such a significant earnings beat alongside relatively in-line revenue suggests margins are stable. For retailers who have been battling concerns around margin compression, this is a very good thing.

Best Buy’s management team did note consumer preferences have been changing. Accordingly, there’s still the potential for margins to compress in a recessionary environment. Thus, we’re not out of the woods yet.

However, these results certainly piqued the interest of many investors today. Best Buy appears to be a retailer worth watching in the quarters to come, regardless of whether one is an investor or not, due to the signals this company’s performance can provide on the entire sector.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.