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GuruFocus has detected 2 Warning Signs with Best Buy Co Inc $BBY.
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Best Buy Co Inc (NYSE:BBY)
Intrinsic Value: Projected FCF
$45.68 (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 $45.68. The stock price of Best Buy Co Inc is $56.47. Therefore, Best Buy Co Inc's Price to Intrinsic Value: Projected FCF Ratio of today is 1.2.

BBY' s Price-to-Intrinsic-Value-Projected-FCF Range Over the Past 10 Years
Min: 0.33   Max: 9.6
Current: 1.2

0.33
9.6

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Best Buy Co Inc was 9.60. The lowest was 0.33. And the median was 1.16.

BBY's Price-to-Intrinsic-Value-Projected-FCF is ranked higher than
52% of the 525 Companies
in the Global Specialty Retail industry.

( Industry Median: 1.25 vs. BBY: 1.20 )

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

201501201504201507201510201601201604201607201610201701201704
total_freecashflow 1,025-134149-45703356656-621,01390
201207201210201301201304201307201310201401201404201407201410
total_freecashflow -776-1051,392-179-10318464519732120
201108201111201202201204
total_freecashflow 4885516238

Add all the Free Cash Flow together and divide 6 will get Best Buy Co Inc's FCF(6 year avg) = $1,133.50.

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(Apr17)*0.8)/Shares Outstanding
=(9.52035159596*1133.5+4499*0.8)/315.000
=45.68

* 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
=56.47/45.6841858223
=1.24

* 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

Feb08Feb09Feb10Feb11Feb12Jan13Jan14Jan15Jan16Jan17
Projected FCF 40.2744.9952.0949.6360.7643.2537.7943.3639.5450.68

Best Buy Co Inc Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
Projected FCF 43.3643.4543.2742.4639.5443.2047.9846.6050.6845.68
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