BBY - Embedded Expectations Analysis - 2021 05 04
Best Buy Co., Inc. (BBY:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 17.1x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about changing customer trends, the potential of their technology and automation investments, and their e-commerce penetrationSpecifically, management may lack confidence in their ability to achieve their operating margin targets, manage inventory levels to meet online demand, and adapt to changing consumer trends. Furthermore, they may be exaggerating their focus on virtual health care capabilities as well as the potential of their technology and automation investments. Moreover, management may lack confidence in their ability to maintain their sales mix, continue to ramp e-commerce penetration, and generate more in-home adviser leads through digital channels. Additionally, they may have concerns about structural market changes caused by the pandemic, increases to their lease renewal thresholds, and supply constraints across computing and home theater categories. Finally, management may lack confidence in their ability to drive both sales efficiency and effectiveness improvements through physical stores floor plan reductions and retrain store employees despite transitioning to a more digital shopping environment
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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