BBY - Embedded Expectations Analysis - 2020 07 07
Best Buy Co., Inc. (BBY:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with an 18.3x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about their focus on Best Buy Health, revenue declines, and their e-commerce capabilitiesSpecifically, management may lack confidence in their ability to mitigate Q2 sales pressures, sustain curbside performance, and continue to manage inventory levels. Furthermore, they may be concerned about service revenue declines due to higher online transactions, the impact of lower profit-sharing revenue on gross margins, and the productivity of their In-Home Advisors. In addition, management may lack confidence in their ability to execute their Building the New Blue strategy to help customers meet daily needs and satisfy online medical device demand. Moreover, management may be exaggerating their focus on Best Buy Health, their opportunities in highly consultative categories, and the potential of new products coming into the market
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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