Briefing From The Editor -- BBY Stock

Now trading at a price of $79.3, Best Buy Co. has moved -1.6% Friday.

As of April 2023, the company's 50-day average price was $75.33. Best Buy Co., Inc. engages in the retail of technology products in the United States and Canada. Based in Richfield, MN, the large-cap Consumer Discretionary company has 52,200 full time employees. Best Buy Co. has offered a 4.4% dividend yield over the last 12 months.

Stable Revenues With Increasing Reinvestment in the Business:

2020-01-31 2021-01-31 2022-01-31 2023-01-31
Revenue (MM) $43,638 $47,262 $51,761 $46,298
Gross Margins 23.0% 22.4% 22.5% 21.4%
Operating Margins 4.7% 5.6% 5.8% 4.2%
Net Margins 3.53% 3.8% 4.74% 3.06%
Net Income (MM) $1,541 $1,798 $2,454 $1,419
Net Interest Expense (MM) -64 -52 -25 -35
Net Interest Expense (MM) -$64 -$52 -$25 -$35
Depreciation & Amort. (MM) -$812 -$839 -$869 -$918
Earnings Per Share $5.75 $6.84 $9.84 $5.63
EPS Growth n/a 18.96% 43.86% -42.78%
Diluted Shares (MM) 268 263 249 218
Free Cash Flow (MM) $1,822 $4,214 $2,515 $894
Capital Expenditures (MM) -$743 -$713 -$737 -$930
Net Current Assets (MM) -$3,255 -$1,940 -$3,945 -$4,206
Current Ratio 1.1 1.19 0.99 0.98
Long Term Debt (MM) $1,257 $1,253 $1,216 $1,160
Net Debt / EBITDA -0.1 -1.05 -0.27 -0.02

Best Buy Co. has stable revenues and increasing reinvestment in the business and low leverage. Additionally, the company's financial statements display average operating margins with a stable trend and generally positive cash flows. However, the firm has slimmer gross margins than its peers. Finally, we note that Best Buy Co. has flat EPS growth.

A Very Low P/E Ratio but Trades Above Its Graham Number:

Best Buy Co. has a trailing twelve month P/E ratio of 13.4, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $6.85, the company has a forward P/E ratio of 11.0. The 3.6% compound average growth rate of Best Buy Co.'s historical and projected earnings per share yields a PEG ratio of 3.76. This suggests that these shares are overvalued. Furthermore, Best Buy Co. is likely overvalued compared to the book value of its equity, since its P/B ratio of 6.2 is higher than the sector average of 3.12. The company's shares are currently trading 76.6% above their Graham number. Ultimately, Best Buy Co.'s strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.

Analysts Give Best Buy Co. an Average Rating of Hold:

The 23 analysts following Best Buy Co. have set target prices ranging from $62.0 to $110.0 per share, for an average of $79.0 with a hold rating. As of April 2023, the company is trading -4.6% away from its average target price, indicating that there is an analyst consensus of little upside potential.

Best Buy Co. has an average amount of shares sold short because 5.9% of the company's shares are sold short. Institutions own 82.2% of the company's shares, and the insider ownership rate stands at 10.98%, suggesting a large amount of insider shareholders. The largest shareholder is the Vanguard Group, Inc., whose 11% stake in the company is worth $1,928,418,584.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.