BBBY
Bed Bath & Beyond Inc.
$5.18
Distressed or Transitioning
75%
Current EPS × Depressed Multiple
Moderate
·
Conviction
Undervalued
Trading 35.8% below fair value
You pay
$5.18
Bear
$5.38
Fair
$8.06
Bull
$10.75
Bear
$5.38
+3.9%
EPS continues to decline, 5x multiple
Fair
$8.06
+55.7%
Current EPS stabilizes, 8x multiple
Bull
$10.75
+107.6%
Credible recovery, multiple re-rates to 10x
Key Value Driver
Whether the core business model is intact or structurally impaired
Implied Market Multiple
4.8x
Summary
Our base-case estimate uses Current EPS × Depressed Multiple. We then blend that result with the average analyst price target of $8.00 from 41 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $8.06 per share.
Warnings
Don't assume past cash flow levels will return — the company's troubles may have permanently reduced its ability to generate profits.
A stock can look cheap on paper and still lose half its value if the underlying business is permanently damaged.
The wide range between our best and worst cases is intentional — pretending to know a precise value for a troubled company would be misleading.
Key Risks
- Bullish DCF projections are fundamentally unknowable for distressed companies
- M&A speculation can floor the stock above intrinsic value temporarily
- Management credibility is a key input — new CEO expands the bull case