Best Buy Co., Inc. (XNYS:BBY) In-Depth Stock/Fundamental/Options Analysis Today

Primary Facts

BBY

Name:

Best Buy Co., Inc. (XNYS:BBY)

Sector:

- 56000.00K

Industry:

Specialty Retail

CEO:

Ms. Corie Barry

Total Employees:

105,000

Our Technological Advancement Rating

Our Rating:

D

Technological advancement compared to industry is -280.34% lower

ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF BEST BUY CO., INC.(BBY) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SPECIALTY RETAIL INDUSTRY. DATE: 07/09/2022

Primary Targets/Price Insights

Previous Close ($) :

71.14

One Month Price Target:

$71.74

Six Month Price Target :

$74.75

Likely Price in One Year's Time:

Ticker:

$78.37

Likely Trading Range Today Under (Normal Volatility)
 

$70.82

Price Upper limit ($) :

$71.48

Price Lower limit ($) :

Crash Risk Prep/Key Price Levels (High Volatility/Risk)

Price, as per data analysis, isn't likely to fall below:

Today:

$67.13

                                                               This week:

$62.18

                                                        This month :

$53.22

Other Primary facts

Market Cap:

16.07B

Market Cap Classification:

Mid Cap

Number of Shares

IPO Date:

225.17M

Best/Worst Daily Performance (Last 3+ Years)
 

Highest Daily Appreciation:

16.79%

-15.25%

Worst Daily Decline:

Our Options Trading Entry Points

Iron Condor entry points for options expiring in 1 week's time

Low risk (<2%) entry points

Buy Call:

Sell Call:

Buy Put:

Sell Put:

$89.74

$81.26

$52.54

$61.02

Medium risk (<10%) entry points

Buy Call

Sell Call

$78.50

Buy Put:

Sell Put:

$76.69

$63.75

$65.59

These entry points can be used for other strategies, such as butterflies, straddles, etc.

Risk-Adjusted returns (Sharpe Ratio) of

BBY

Sharpe Ratio:

0.19%

Comparison:

BBY, is amongst the top 40% stocks with lowest risk-adjusted returns

Sharpe ratio is -93.45% lower than the industry

& is -91.79% lower than the market/S&P 500 average

Average Returns/Yield of

BBY

Daily returns:

0.01%

Weekly returns:

0.07%

Monthly returns:

0.28%

Yearly returns:

34.92%

Comparison of returns:

Average annual returns/yield (last 3 years) is -90.38% below industry average

Classification:

BBY, is amongst the top 40% lowest yielding stocks in terms of daily returns

Results of T-Test of Returns:

0.23

Statistical test of Returns:

BBY has yielded returns statistically similar to the market

SHARPE ratio explained.png

Volatility (measured by Standard Deviation)

Daily Volatility:

2.75%

Weekly Volatility:

6.15%

Monthly Volatility:

12.29%

Yearly Volatility:

42.58%

Volitlilty of last five days (Measured by Standard Deviation) 

Average Volatility of this Week:

3.41%

Volatility in last five trading days has been 24.15% above long-term volatility

Value at Risk Analysis (VaR)

Daily VaR:

-5.63%

Weekly VaR:

-12.59%

Monthly VaR:

-25.18%

How Much Can the price of

BBY

Decline in a Recession?

Likely price decline in a recession: 

Base case (decline):

-22%

Worst case (decline):

-87.24%

This translates to price declining to:

$55.41

This translates to price declining to:

$9.08

Severe Crash Probability

Risk of crash in next 6/12 months: Low (<25%)

What is Value at Risk (VaR)?

VaR explained figure

Risk Fundamentals

BBY is a 77.75% riskier investment compared to the market/S&P 500 & is 52.28% riskier than Nasdaq (IXIC)

Risk (measured by volatility) is -33.82% below industry average

Overall, it is amongst the top 50% most risky stocks

Beta Examination of

BBY

Beta in relation to market/S&P 500--1.51

Expected beta in 1 year's time:

0.849

Expected beta in 3 year's time:

1.201

Unlevered (debt free) Beta:

0.929

Beta in relation to Nasdaq (XNAS):

0.921

Beta in relation to all global stocks::

0.804

Beta Comparison & Analysis

Beta of competitors/peers::

1.566

Beta is -3.47% lower than peers

Average Industry Beta: 

1.43

Beta is 5.73% above industry average

Sustainable Growth Rate Analysis

Sustainable growth rate for this stock/firm:

45.03%

Sustainable growth rate is 35.61% above industry average

Alpha provided | Alpha Analysis 

Alpha provided:

-0.101

Alpha is -146.17% below industry average alpha yield

Alpha is -646% below the market average

Analysis of Cost of Capital of

BBY

Equity cost of capital:

0.135

Equity cost of capital is 4.34% above industry mean WACC

Unlevered (without debt) cost of capital:  

8.30%

Before-tax cost of debt:

0.63%

After-tax cost of debt:

0.49%

Overall debt rating:

Highest AAA investment grade

Weighted average cost of capital (WACC):

0.49%

WACC is 46.61% above industry mean WACC

Key Per-Share Metrics & Analysis

Revenue per share:

$225.48

Revenue growth rate per share of (3Y):

3.85

Annual revenue growth rate is 0.78% above the industry average

EPS:

$9.02

Expected Annual growth rate of  EPS (3Y):

22.91%

Expected future EPS growth rate is -34.96% lower than the Specialty Retail industry

Free cash flow (FCF) per share:

$4.18

Balance sheet equity growth per share: 60.70%

Equity growth rate per share is 18.36% higher than the industry

Debt per share

$14.26

EBITDA per share

$16.05

Valuation Analysis Today of

BBY

P/E Ratio:

9.52

P/E Ratio of Competitors/Peers:

9

P/E ratio is 5.81% higher than main peers & is -55.72% lower than the industry

Stock price/value with industry average P/E ratio: $194.02

BBY is -63.33% undervalued if valued using industry average P/E ratio

Share value as per dividend discount (DDM) model: $63.43

Present value of the expected future dividends only: $46.62

P/S (Price to Sales ratio):

0.32

Price to sales ratio is -92.24% below the industry mean

P/B (Price to book value ratio):

3.85

Price to free cash flow: 17.00

Price to free cash flow ratio is -31.76% lower than the industry

Net income growth rate (3Y):

108.06%

Net income growth rate is -122.83% lower than the industry average net income growth rate

Dividend Analysis

Dividend payout rate: 7.95%

Dividend yeild: 4.44%

Previous Dividend: $0.88

Previous adjusted dividend: $0.88

Previous Dividend: $3.16

Expected next dividend best case: $0.99

Expected next dividend worst case: $0.77

Average dividend payment (long-term): $0.66

Average dividend increase/decrease (growth rate) % per period: 6.30%

Expected next dividend payment date: 10/03/2022

Expected next dividend record date: 09/12/2022

-

Previous dividend payment date: 07/05/2022

Previous dividend record date: 14/06/2022

-

Dividend History:

2022-06-13--$0.88

2021-12-13--$0.70

2021-06-16--$0.70

2022-03-23--$0.88

2021-09-13--$0.70

2021-03-17--$0.70

Dividend growth rate is -2919.41% lower than the industry average

In-depth Debt & Leverage Analysis

Debt to equity ratio:

77.25%

Net debt to equity ratio:

-6.90%

Debt to assets ratio:

18.14%

Net debt to assets ratio:

-1.62%

Debt-to-asset ratio is -74.93% below industry average

Ability to repay debt:

Interest coverage ratio:

144.56

Interest coverage ratio is 483.70% more than industry average

Looking forward:

Debt growth rate:

106.68%

Annual debt growth is 52% higher than industry average debt growth rate

Debt repayment rate in last quarter: 0.00%

Analysis of Key Statistics  

Correlation of price movement with the market:

0.658

Statistical significance of correlation:

BBY has a statistically significant correlation with the market

Average Correlation of  the industry with the market:

0.475

Stock price is 38.53% more correlated with the market, compared to the industry average correlation

R Squared (percentage of price movement explained by movement of the market): 

0.475

Correlation of price movement with Nasdaq (^IXIC):

-0.019

Covariance  of price movement with the market:

-0.03

Kurtosis 

5.628

Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns

Skewness of returns:

-0.074

Returns are, approximately, symmetrical

Fundamental Analysis & Dupont Analysis of

BBY

Gross Profit Margin Ratio:

90%

Operating Profit Margin Ratio:

5.38%

Operating profit margin is -17.23% lower than the industry

Net Profit Margin Ratio:

90%

Effective Tax Rate:

18.90%

Effective tax rate is -16.20% lower than the industry

Dupont Method

Net Profit Margin

Return on Equity Ratio (ROE):

×

ROA

=

×

52.91%

Return on equity (ROE) is 3619.41% higher than the industry

Financial Leverage

Asset Turnover Ratio (ROA):

12.43%

Return on assets (ROA) is 33.55% higher than the industry

Financial Leverage:

1.2x

Current Ratio:

1.17

Current ratio is -38.09% below industry average

Cash Conversion Cycle (days):

-49.7

Cash conversion cycle is -176.85% below industry average

The remaining useful life of property plant & equipment is: 5.8 years

Stock based compensation to net income ratio:

1.68%