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  • Is Best Buy Undervalued? [View article]
    2010E Net margin comparison of various retailers:

    Best Buy ( 2.8%
    Walmart ( 3.5%
    Amazon ( 5.1%
    CVS ( 3.7%
    Home Depot ( 4.8%

    Good point on low margins of BBY. As shown above, their margins are even lower than those of CVS, a drug retailer, and Walmart, low price retailer.

    SG&A expense (23% of sales) is what made BBY miss 1Q10 estimates. The good news is this expense is one that Mgmt has direct control over, and we're hoping Mgmt makes good on their word that they'll get SG&A expense under control through remainder of 2010 year (they maintained their full year estimates).
    Aug 4, 2010. 03:20 AM | 1 Like Like |Link to Comment
  • Is Best Buy Undervalued? [View article]
    One catalyst is the second half of 2010, particularly 4Q due to holiday season. 4Q EPS of $1.82 per share represents 53% of 2010E full year EPS of $3.44.

    BBY is part value play (10x P/E), and part seasonal play on the upcoming 4Q season. It seems the market is giving zero value to BBY for a possible decent holiday season.

    In 4Q 2009 last year, a year where US economy was even worst off, BBY exceeded 4Q consensus estimates by reporting $1.82 per share EPS, up from $1.35 per share in 4Q 2008.

    The economy is still not great, but it does feels like its in much better shape than a year ago, therefore BBY should do better this holiday season than prior.
    Aug 4, 2010. 03:11 AM | 1 Like Like |Link to Comment