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  • Writer's pictureIshfaaq Peerally

Bed Bath & Beyond Stock Analysis

BBBY Stock Analysis


  • Closing stores will lower SG&A and Capex, leading to better margins in the long-term

  • Much of losses iin recent years have been impairment of goodwill and did not affect cash flows

  • Cash from divestitures

  • Using cash to buyback shares ($625 million in FY21)

  • With 26% of shares outstanding short and 58% of float short, there is the possibility of a short squeeze


  • Target of speculators

  • Business in decline

  • Revenues will fall as more stores close

Financial Analysis:

BBBY Stock Analysis


  • My personal Biases:

    • Invested in GameStop in 2019 and profited from the short squeeze, doesn’t see the same catalysts with BBBY

  • Assumptions:

    • Using Discounted Owner’s Earnings to calculate the intrinsic value

    • Using company estimates for FY21 revenues

    • Revenues declining by 5% p.a till 2025

    • Operating cash flow margin of 4%

    • CapEx gradually declining

BBBY Stock Analysis

  • Discount rate of 15%

  • Terminal growth rate of 0%

  • Margin of safety of 30%

BBBY Stock Analysis

  • Exit Multiples based on P/OE Ratio

  • 30% of shares outstadning repurchased by 2025

  • Owner’s Earnings 20% higher in 2025 in bull case and 20% lower in 2025 in bear case

BBBY Stock Analysis


  • Overvalued

  • Investing because of a possible short squeeze without any fundamentals is just speculating

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