BBY - Embedded Expectations Analysis - 2020 05 01
Best Buy Co. (BBY:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 17.2x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about customer experiences, cost saving initiatives, and COVID-19Specifically, management may be exaggerating their ability to address online and in-store customer needs through digital technologies and improve the pick-up in-store customer experience. Furthermore, they may be exaggerating the progress of their “Building the New Blue†strategy, their technology innovation opportunities, and the sustainability of a favorable consumer environment. Moreover, management may lack confidence in their ability to continue to reduce SG&A expense, sustain operating income margins, and generate cost savings from efficiency investments. Additionally, they may have concerns about the impact of COVID-19 on H1 2020 results and their ability to coordinate with partners, and they may be downplaying concerns about changes to the global consumer electronics market once the pandemic ends. Finally, management may lack confidence in their ability to drive new Total Tech Support memberships and predict changing consumer trends
Best Buy provides computing and mobile phones, consumer electronics, appliances, entertainment, services and other products. The company operates two reportable segments: Domestic, which is comprised of the operations in all states, districts and territories of the U.S. under various brand names including Best Buy, bestbuy.com, Best Buy Direct, Best Buy Express, Best Buy Mobile, Geek Squad, GreatCall, Magnolia and Pacific Kitchen and Home; and International, which is comprised of all operations in Canada and Mexico under the brand names Best Buy, Best Buy Express, Best Buy Mobile, Geek Squad and the domain names bestbuy.ca and bestbuy.com.mx.
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