Best Buy Co Stock gives every
Best Buy Co (NYSE: BBY, 30 Financials) stock is showing all signs of a fair valuation, according to GuruFocus Value’s calculation. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, the company’s past growth, and analysts’ estimates of the company’s future performance. If a stock’s price is significantly above the GF value line, it is overvalued and its future performance is likely to be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of $ 108.11 per share and market cap of $ 27.1 billion, Best Buy Co stock appears to be priced correctly. The GF value for Best Buy Co is shown in the table below.
Since Best Buy Co is fair valued, its long-term stock return is likely to be close to the growth rate of its business, which has averaged 9.4% over the past three years. years and is expected to grow by 0.74% per year over the next three years. at five years.
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Since investing in companies with poor financial strength could result in a permanent loss of capital, investors should carefully consider the financial strength of a company before deciding whether or not to buy shares. Examining the cash-to-debt ratio and interest coverage can provide a good initial perspective on the financial strength of the business. Best Buy Co has a cash-to-debt ratio of 1.09, which ranks in the mid-range of companies in the Retail – Cyclic industry. Based on this, GuruFocus ranks Best Buy Co’s financial strength at 7 out of 10, which suggests a fair track record. Here is Best Buy Co’s debt and cash flow over the past several years:
Investing in profitable businesses carries less risk, especially in companies that have demonstrated consistent profitability over the long term. Typically, a business with high profit margins offers better performance potential than a business with low profit margins. Best Buy Co has been profitable 9 years in the past 10 years. In the past 12 months, the company achieved sales of $ 50.3 billion and earnings of $ 8.55 per share. Its operating margin of 6.24% in the mid-range of companies in the Retail – Cyclical industry. Overall, GuruFocus rates Best Buy Co’s profitability as fair. Here is Best Buy Co’s sales and net income for the past few years:
One of the most important factors in the valuation of a business is growth. Long-term equity performance is closely linked to growth, according to GuruFocus research. Companies that grow faster create more shareholder value, especially if that growth is profitable. Best Buy Co’s average annual revenue growth is 9.4%, which ranks better than 77% of companies in the retail industry – cyclical. The average EBITDA growth over 3 years is 14%, which is in line with the average for companies in the Retail – Cyclical industry.
A company’s profitability can also be assessed by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). Return on invested capital (ROIC) The extent to which a business generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company should pay, on average, to all of its security holders to finance its assets. If the return on invested capital exceeds the weighted average cost of capital, the company is likely to create value for its shareholders. In the past 12 months, Best Buy Co’s ROIC is 25.59 while its WACC is 9.94. Best Buy Co’s historical ROIC vs WACC comparison is shown below:
In conclusion, the share of Best Buy Co (NYSE: BBY, 30 years Financials) is estimated at its fair value. The company’s financial position is fair and its profitability is fair. Its growth is in the mid-range of companies in the Retail – Cyclical industry. To learn more about Best Buy Co’s stocks, you can view its 30-year financial data here.
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