BBY
Best Buy Co., Inc.
$61.63
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Fair Value
Trading 21.4% below fair value
You pay
$61.63
Bear
$68.62
Fair
$78.42
Bull
$88.23
Bear
$68.62
+11.3%
$5.04 × 14x P/E
Fair
$78.42
+27.2%
$5.04 × 16x P/E
Bull
$88.23
+43.2%
$5.04 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
12.2x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $73.25 from 41 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $78.42 per share.
Warnings
Dividend-based valuation: $135.06 (above our primary estimate by 67%). Large gaps may signal the dividend doesn't reflect full earning power.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples