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GuruFocus has detected 4 Warning Signs with Best Buy Co Inc $BBY.
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Best Buy Co Inc (NYSE:BBY)
Price to Intrinsic Value: Projected FCF
$46.60 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, Best Buy Co Inc's projected FCF intrinsic value is $46.60. The stock price of Best Buy Co Inc is $45.56. Therefore, Best Buy Co Inc's Price to Intrinsic Value: Projected FCF Ratio of today is 1.0.

BBY' s Price to Intrinsic Value: Projected FCF Range Over the Past 10 Years
Min: 0.7   Max: 1.02
Current: 0.98

0.7
1.02

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Best Buy Co Inc was 1.02. The lowest was 0.70. And the median was 0.80.

BBY's Price to Intrinsic Value: Projected FCF is ranked higher than
68% of the 493 Companies
in the Global Specialty Retail industry.

( Industry Median: 1.35 vs. BBY: 0.98 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here Best Buy Co Inc's FCF(6 year avg) is calculate as

Best Buy Co Inc Quarterly Data

201407201410201501201504201507201510201601201604201607201610
total_freecashflow 321201,025-134149-45703347665-62
201202201204201207201210201301201304201307201310201401201404
total_freecashflow 516238-776-1051,392-179-103184645197
201102201105201108201111
total_freecashflow 4301,1224885

Add all the Free Cash Flow together and divide 6 will get Best Buy Co Inc's FCF(6 year avg) = $1,208.33.

Best Buy Co Inc's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Oct16)*0.8)/Shares Outstanding
=(9.52035159596*1208.33333333+4261*0.8)/320.000
=46.60

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

Best Buy Co Inc's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=45.56/46.6017443077
=0.98

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Best Buy Co Inc Annual Data

Feb07Feb08Feb09Feb10Feb11Feb12Jan13Jan14Jan15Jan16
Projected FCF 35.2438.5145.0552.3548.1358.1943.1838.5443.7638.56

Best Buy Co Inc Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
Projected FCF 42.3345.2443.7643.4543.2742.4638.5643.1647.9846.60
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