Are Investors Expecting Further Upside in Best Buy?

Jul.19.10 | About: Best Buy (BBY)

Trefis members have created forecasts for two key drivers of Best Buy’s (NYSE:BBY) stock over the last week: (1) Revenue per Square Foot for Best Buy US, (2) Number of International Stores. Their forecasts suggest that Revenue per Square Foot for Best Buy US and Number of International Stores will trend higher than the Trefis forecast. These projections suggest a combined upside of around 11% for Best Buy’s stock. The higher than expected increase in Revenue per Square Foot for Best Buy US may come at the expense of competitors like Wal-Mart (NYSE:WMT) and RadioShack (NYSE:RSH).

Best Buy’s Stores in US constitute 74% of the $42 Trefis price estimate for Best Buy’s stock. In comparison, Stores Internationally account for 18% of the Trefis estimate for Best Buy’s stock.

Considering the importance of its US as well as international business, Best Buy’s stock is quite sensitive to both 1) Revenue per Square Foot for Best Buy US and 2) Number of International Stores. Below are the charts showing recent estimates created by Trefis members for the two drivers.

1. Revenue per Square Foot for Best Buy US

The average of forecasts for Revenue per Square Foot for Best Buy US created by Trefis members indicated a projected increase from $998 in 2010 to $1,253 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from $926 in 2010 to $1,083 by the end of the Trefis forecast period. The member estimates imply an upside of about 9% to the Trefis price estimate for Best Buy’s stock. In the past, Revenue per Square Foot for Best Buy US decreased from $953 in 2005 to $907 in 2009.

You can drag the Revenue per Square Foot for Best Buy US forecast trend-line above to express your own view, and see the sensitivity of Best Buy’s stock to Revenue per Square Foot for Best Buy US.

Our complete analysis for Revenue per Square Foot for Best Buy US is here.

2. Number of International Stores

The average of forecasts for Number of International Stores created by Trefis members indicated a projected increase from about 456 in 2010 to around 619 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 397 in 2010 to 554 by the end of the Trefis forecast period. The member estimates imply an upside of about 2% to the Trefis price estimate for Best Buy’s stock. In the past, the Number of International Stores has increased from nearly 298 in 2005 to about 382 in 2009.

You can drag the Number of International Stores forecast trend-line above to express your own view, and see the sensitivity of Best Buy’s stock to Number of International Stores.

Disclosure: No positions