Best Buy Transforming To Its Online Sales

seekingalpha2021-09-06

Summary BBY's revenue growth has been impressive despite discontinuing operations from Mexico. Management anticipates that there will be no additional material charges associated with exits in Mexico...

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Zivcheah
2021-09-06
Zivcheah
Done
Annalz
2021-09-06
Annalz
Tell me your opinion about this news...
edamame
2021-09-06
edamame
Yes

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBest Buy Transforming To Its Online Sales\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-09-06 17:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4453704-best-buy-transforming-to-its-online-sales><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nBBY's revenue growth has been impressive despite discontinuing operations from Mexico.\nManagement anticipates that there will be no additional material charges associated with exits in Mexico...</p>\n\n<a href=\"https://seekingalpha.com/article/4453704-best-buy-transforming-to-its-online-sales\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BBY","symbol_name":"百思买","start_time":0,"source_url":"https://seekingalpha.com/article/4453704-best-buy-transforming-to-its-online-sales","article_id":"1194258301","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1194258301","pubTimestamp":1630921195,"columns":[],"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Summary\n\nBBY's revenue growth has been impressive despite discontinuing operations from Mexico.\nMana","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BBY":"百思买"},"translate_title":"百思买向网上销售转型","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BBY":0.9},"content_text":"Summary\n\nBBY's revenue growth has been impressive despite discontinuing operations from Mexico.\nManagement anticipates that there will be no additional material charges associated with exits in Mexico, as all stores have already been closed.\nBBY's domestic and international sales have increased as the company has made significant shifts to online sales and improved service for their electronic products.\nBBY is well positioned to capitalize on the growing demand for technology and electronics.\nIncreased both its top and bottom lines on a quarterly and year-over-year basis and trades at a discount to its peers.\n\nInvestment Thesis\nThe future growth of Best Buy (NYSE:BBY) has been a source of concern for investors. Consumer behaviour has been shifting to online shopping as a result of the pandemic, creating an opportunity for BBY to capitalize on the demand for electronics such as work-from-home setup equipment. According to a recentFMI study, the Consumer Electronics market will grow at a CAGR of 5.6 percent through 2031. BBY is in a strong position because it has increased its online sales while improving its physical stores, which enables the company to serve customers based on their needs. Its strategic decision to cease operations in Mexico appears to be paying off, based on the company's current financial performance. BBY is comparatively cheap against its peers, trading at a fair price of $180.2, representing a 37 percent initial upside.\nOverview\nBest Buy is making good progress in its efforts to compete with other online retailers. Enhancing its market share more than doubled the company's performance in 2019. The chart below illustrates BBY's performance in terms of total online revenue.\n\nSource: Sec Filing, Prepared by the Author\nThis may not seem significant in comparison to Amazon.com, Inc. (NASDAQ:AMZN), but when compared to its historical performance, BBY is performing well in its online segment. As of Q2, BBY is on the verge of surpassing its 2021 annual figure and has the potential to do so in the coming months due to the holiday season.\nIn August 2021, BBY announced to offer a variety of e-transportation options via its online platform and selected retail locations, expanding its product to cater the needs of consumers in a new normal setting.\nBBY also increased its revenue by 20% year over year in the same quarter, despite fewer stores opening.\n\nSource: Q2 Report\nQ2 Financial Overview\nStrong Financial Performance\nIn Q2, BBY generated a total revenue of $11,849.00 million, up 20% from $9,910.00 million in the same quarter last year and up 2% quarter over quarter. Its gross margin remains flat at 24 percent. BBY generated an all-time high EBITDA TTM amounting to $4,166.0 million. With the management's guidance, the risk associated with restructuring charges associated with the discontinuation of operations in Mexico has been minimized. Securing its robust trend with an all-time high net profit margin of 6.19 percent.\nStrong Balance Sheet\nBBY generated total cash and cash equivalents of $4,340.00 million in Q2, down 18 percent from $5,305.00 million in the same quarter last year. This is primarily due to the company repurchasing its own shares for a total of $1,573 million over the last four quarters. Its FCF improved on a QoQ basis, amounting to $597 million. This is sufficient to continue paying a growing dividend of $2.80 per share on an annualized basis. Additionally, its working capital improves to $10,357.00 million, up 3% from $10,080.00 million in the same quarter last year and up 7% on a quarterly basis. Its D/E ratio has improved significantly over the last year to 31.5 percent.\n\nBBY ended its second quarter with a strong ROE of 60.54 percent.\nValuation: DCF and BBY vs its Peers\n\nSource: Data provided by Seeking Alpha, Prepared by the Author\nGameStop Corp. (NYSE:GME), Rent-A-Center, Inc. (NASDAQ:RCII), Conn's, Inc. (NASDAQ:CONN), AutoZone, Inc. (NYSE:AZO), Tractor Supply Company (NASDAQ:TSCO)\nBBY is relatively cheap compared to its peers. Using the DCF model to calculate its intrinsic value, BBY has an intrinsic value of $231.9.\n\nSource: Prepared by the Author\nI used theanalyst revenue forecastto complete my DCF model. I expect BBY’s operating income and accrued income tax expense to grow to 7.1 percent and 27.5 percent, respectively. Additionally, I assume it will continue to invest in its core working capital and expand its fixed assets by 1.2 percent and 1.6 percent YoY, respectively, throughout the model.\nI projected the terminal value of BBY using a conservative perpetual growth and implied fair EV/EBITDA multiple of 2.5% and 9.53x, respectively. Then, using the weighted average cost of capital of 9.4% as my discount rate. Additionally, BV Debt - Interest Bearing is calculated as the average of short-term and long-term debt. However, when calculating the enterprise value, I use total debt to arrive at a conservative estimate of $180.2 fair price and the best price of $90.09 per share.\nPrice Action: Symmetrical Triangle, Potential MACD Bullish Crossover, Potential Breakout\n\nSource\nBBY is currently consolidating at a range of $100-$123, indicating considerable caution at today's price. I'm anticipating a further breakout in conjunction with the bullish MACD crossover. BBY may be discounted further at key levels before retesting May 2021’s high.\nRisk Keynote\nThe possibility of another lockdown as a result of the continued spread of new variants of COVID-19 could play a role in Best Buy's performance. Additionally, there is a current fear of stagflation, as the economy forecasts a slowdown in GDP growth despite rising inflation. Consumer spending is forecasted to fall from 2.9 percent to 0.3 percent in Q3 2021, harming BBY's potential in the future.\nFinal Thoughts\nDespite its risks involved, BBY is an excellent catch the deeper it falls. Its online sales growth has been impressive and continued growth in this segment will propel BBY to new highs. BBY's Ex-Div Date is September 13, 2021.\n\nSource: Seeking Alpha’s Dividends Tab\nBBY is consistently increasing shareholder value and pursuing value-adding strategies that contribute to the company's financial strength. According to management, BBY intends to launch a new membership program called Best Buy Totaltech by the end of Q3 2022, which will enable BBY to concentrate on sales through technology. BBY is a stock worth monitoring due to its strong profitability and liquid balance sheet.","kind":"news","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":817155064,"gmtCreate":1630922998558,"gmtModify":1676530421373,"author":{"id":"3582538202393061","authorId":"3582538202393061","name":"Zivcheah","avatar":"https://static.tigerbbs.com/d52882be9b594ebb5b5933851792d286","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3582538202393061","authorIdStr":"3582538202393061"},"htmlText":"Done","listText":"Done","text":"Done","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/817155064","repostId":1194258301,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":817125555,"gmtCreate":1630922036277,"gmtModify":1676530421158,"author":{"id":"3577089953267281","authorId":"3577089953267281","name":"Annalz","avatar":"https://static.tigerbbs.com/ffd285ab6189bb61da4b48c3e149eedc","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3577089953267281","authorIdStr":"3577089953267281"},"htmlText":"Tell me your opinion about this news...","listText":"Tell me your opinion about this news...","text":"Tell me your opinion about this news...","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/817125555","repostId":1194258301,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":817126178,"gmtCreate":1630921686194,"gmtModify":1676530421040,"author":{"id":"3581982441889617","authorId":"3581982441889617","name":"edamame","avatar":"https://static.tigerbbs.com/63449ce6bfbebf6849034560328a7d39","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3581982441889617","authorIdStr":"3581982441889617"},"htmlText":"Yes","listText":"Yes","text":"Yes","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/817126178","repostId":1194258301,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":40,"commentSize":3,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1194258301"}