Summary
- The company has had a very long and strong history of growth, profitability and operating returns.
- Margins continue to be the major question mark; however, the peak rate of decline may be behind us.
- The stock appears to have overshot to the downside and trades at a significant discount to valuation.
- Online sales continue to expand at a 20%+ rate. The company’s products, on average, are cheaper than Amazon even without a coupon. Savings are even larger with coupons or loyalty membership.
Summary
Bed Bath & Beyond (NASDAQ:BBBY) is not the next Radio Shack or Blockbuster, but a company with historically strong fundamentals and cash flow generation. Its product pricing is already on par with and even cheaper than Amazon, while the market has overshot to the downside. The stock, at minimum, should be on every value investor’s watch list.
The Business
Bed Bath & Beyond is a retail giant with a household focus. It has over $12 billion in sales, 8+ brands and 1500+ stores. Brands include the namesake Bed Bath & Beyond, Cost Plus World Market (household items), buybuy BABY (products for babies and young children), Christmas Tree Shops (seasonal/discounted/overstock items), Harmon Face Values (cosmetics/beauty), decorist (online decorators), Personalization Mall (personalized gifts), Of a Kind (unique limited production pieces from new designers) and One Kings Lane (home decor).
Each brand has its own unique character, and the products carried do differ. For example, at World Market you can pick up a chicken coop. Click here to continue reading
