BBY - Embedded Expectations Analysis - 2021 08 18
Best Buy Co., Inc. (BBY:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.8x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about the sustainability of demand, higher SG&A costs, and the execution of their fulfillment strategies.Specifically, management may lack confidence in their ability to manage SG&A costs, continue retaining new customers, and keep pace with strong consumer demand. In addition, they may have concerns about the sustainability of demand for technology products, the progress of replacement cycles in the computing category, and the impact of remodeling their store formats. Moreover, management may also lack confidence in their ability to monetize website traffic, sustain continued product innovation, and improve gross profit through promotional initiatives. Finally, they may be exaggerating the breadth of their fulfillment options and they may have concerns about the impact of reduced stimulus payments on sales performance.
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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