* Note: Prices are in Million (M) USD.
Description:
Best Buy Co., Inc. is an American multinational consumer electronics retailer headquartered in Richfield, Minnesota.
These criteria used Company's Cash, EBITDA and Debt balance to determines its fair value:
Cash : $1,147 M
Debt : $4,051 M
EBITDA : $2,101 M
Net Debt (Debt - Cash): $2,904 M
Since Net Debt is covered by EBITDA within 2 years, 2 points assigned.
This criteria used industry in which company operates:
Sector: Consumer cyclical
Industry: Specialty retail
Based on industry, 3 points assigned.
This criteria used Company's Price To Earning (P/E) Ratio to determines its fair value:
Forward PE Ratio: 11.27
Since Forward PE Ratio is less than 15, 5 points assigned.
This criteria used Company's ability to convert Sales into free cash flow to determine fair value:
Using last 20 overlapping fiscal years (max 20).Average Free Cash Flow: $1,419 M
Average Revenue: $43,243 M
Revenue Converted To Free Cash Flow (%): 3.3%
Since Free Cash Flow (FCF) to Revenue percentage is less than 15, 1 point assigned.
This criteria used company's growth potential to calculate its fair value:
Latest Revenue (2025-01-31): $41,528 M
Revenue 4 Years Ago (2021-01-31): $47,262 M
Last 5 Years Average Revenue Growth: -2%
Since Revenue Growth is between 0 - 5, 1 point assigned.
This criteria used Company's ability to buy back its own share:
Latest Share Count (2025-01-31): $217 M
Share Count 5 Years Ago (2021-01-31): $263 M
Company is buying back its own shares, 3 points assigned.
This criteria used Company's dividend payout ratio to determine its fair value:
Next Year Earnings Per Share (EPS): $6.70
Trailing 12-Month Earnings Per Share (EPS): $6.20
Average Earnings Per Share (EPS): $6.45
Dividend Per Share (DPS): $4
Payout Ratio: 58%
Dividend Yield: 6%
Since company Payout Ratio is greater than 50, 1 point assigned.
Since Dividend Yield is greater than 5, 5 points assigned.
This criteria used Company's Return On Equity (ROE%) to determine its fair value:
Using last 20 valid ROE years (max 20).Average ROE: 27.2%
Since Average ROE is greater than 20, 5 points assigned.
This criteria used Company's current price to its 52 week low price to determines its fair value:
Current Price: $73
52-Week Low: $54
Threshold Price (15% Above 52-Week Low): $62
Since Current price is not within 15% threshold, 0 point assigned.
This criteria used Company's Market Cap to determines its fair value:
Market Capitalization: $13,552 M
Since Market Cap is between 10B - 100B, 2 points assigned.
% Exposure to Total Portfolio
Based on the market cap, we recommend do not exceed 3% exposure of Total Portfolio.
Value-Trade has assigned 28 points to above Best Buy Co. Inc (BBY) stock.
Heads up: One or more P/E inputs look exaggerated and may skew the blend.
• ROE Based PE
31.76 (>2× median)
Further research is recommended; please use your own due diligence.In such cases, multiplying earnings by the long-run average P/E typically gives a closer, more reliable fair value.
Rule of thumb: Last 18 Years Avg P/E (15.21)
× EPS ($6.45) = $98.10.
Last 18 Years Avg PE 15.21, Fair Value PE 15, Industry Based PE 15, RCFC Based PE 12.62, ROE Based PE 31.76, Risk-Free Anchored PE (25% MoS) 17.08. Based on these 6 values, average assigned is 17.78. Value-Trades has assined P/E value 17.78. Since an average (Current Year EPS + Next Year EPS) earning per share is $6.45.
The fair value of Best Buy Co. Inc (BBY) stock should be (17.78 x $6.45) = $114.67.
