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Best Buy (BBY) looks like a steal at sub-$20 prices, according to SA author J Mintzmyer. If a...

Best Buy (BBY) looks like a steal at sub-$20 prices, according to SA author J Mintzmyer. If a buyout offer goes through at $26 a quick 30% profit could be booked - while the "real" revenue-solid Best Buy trading at 10X its forward P/E should trade at a lush $35-$38.
Comments (3)
  • chopchop0
    , contributor
    Comments (3441) | Send Message
     
    These analysts wouldn't know a value trap if it hit them in the face
    9 Aug 2012, 07:31 AM Reply Like
  • 867046
    , contributor
    Comments (398) | Send Message
     
    Well...

     

    1) Yahoo has BBY's book value at $10.73.

     

    2) ecommerce value: Looking at BBY's website on Alexa, BBY is the 79th ranked website in terms of traffic in the US.

     

    3) More Alexa info:

     

    "Statistics Summary for bestbuy.com
    There are 348 sites with a better three-month global Alexa traffic rank than Bestbuy.com. Compared with the overall internet population, its audience tends to be Caucasian; they are also disproportionately moderately educated women earning over $30,000 who browse from home. Its content places it in the “Major Retailers” category of sites. The time spent in a typical visit to the site is roughly five minutes, with 35 seconds spent on each pageview. Visitors to Bestbuy.com view 6.6 unique pages each day on average."
    9 Aug 2012, 08:08 AM Reply Like
  • J Mintzmyer
    , contributor
    Comments (3664) | Send Message
     
    1-- book value is not relevant to a profitable company such as Best Buy. Would you suggest that all companies should trade at book value regardless of earnings?

     

    2/3-- Best Buy could do better in ecommerce, but why is this a major issue?

     

    I'm guessing that you are hypothesizing that Best Buy will lose out to Amazon, and I will concede that they have lost a lot of potential growth to Amazon. Best Buy's revenues have grown over the past 5 years, but obviously slower than Amazon's.

     

    Revenue growth is easy when you sacrifice margins and even profits. Amazon is selling many products for a net loss. If Best Buy did similar practices, I have no doubt that they could grow their revenue line at a similar pace.

     

    http://www.bestbuy.com would be a much more popular place if Best Buy accepted net margins of 0%. BBY currently has gross margins of 25% and historical net around 2%.
    10 Aug 2012, 09:53 AM Reply Like
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