Best Buy operates as a retailer of technology products - television and home theaters,digital cameras and camcorders, DVD and Blu-ray players, car stereo, navigation and satellite radio and related accessories, and services - Geek squad handles computer repair, other tech services, installations, etc. in the United States and internationally. The company was founded in 1966 and is based in Richfield, Minnesota.
BBY Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Best Buy Co Inc. To summarize, we found that Best Buy Co Inc ranked in the 58th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 106%. As for the metrics that stood out in our discounted cash flow analysis of Best Buy Co Inc, consider:
BBY's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 29.87% of tickers in our DCF set.
Best Buy Co Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 32.14. This coverage rate is greater than that of 89.41% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Relative to other stocks in its sector (Consumer Cyclical), Best Buy Co Inc has a reliance on debt greater than just 17.6% of them.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Consumer Cyclical that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as BBY, try CLUB, FRGI, GHG, LEE, and BWA.