Wayfair, ( W), which is a top rival for Bed Bath & Beyond in its niche, has a P-S ratio of 1.8. While AMC is beyond overvalued because of the meme stock trading frenzy, Bed Bath & Beyond is undervalued, based on its P-S ratio. BBBY trades at a P-S ratio of 0.4 and AMC at a P-S ratio of 4.5. Bed Bath & Beyond also has an attractive price after the last volatility spike fizzled out.ĪMC and Bed Bath & Beyond have both been short seller targets but there is a big difference in valuation between these two companies. Why Bed Bath & Beyond is a buyīed Bath & Beyond has an opportunity to grow comp sales as COVID-19 restrictions are lifted and the economy reopens. I estimate that, long term, the digital channel provides a $5b annual revenue opportunity for Bed Bath & Beyond with digital sales as a % of total revenues increasing to more than 50% by 2024. Bed Bath & Beyond now fulfills 41% of digital sales in stores, a percentage that could increase to more than 50% this year as the company launches new digital services and upgrades its technology platform. Bed Bath & Beyond signed on a total of $10.6m new digital customers in 2020 that brought more than $3b in sales, up 95% Y/Y. Digital comp sales grew 86% on a total enterprise basis and 99% for the strong and popular Bed Bath & Beyond brand in Q4’20. While Bed Bath & Beyond’s total store footprint is declining, the home goods retailer has done a great job shifting sales online. Digital channel opportunityĭigital sales are surging for Bed Bath & Beyond. Comp sales growth, which is growth from the same store to allow for fair sales comparisons, was three times the enterprise sales growth rate in its most important categories, 12%.Ĭomp sales growth could accelerate this year as the economy reopens and more people actually visit the chain's stores again. Bed Bath & Beyond’s last earnings report was encouraging because four of its five largest categories saw strong comp sales growth. It was the third consecutive quarter of sales growth on a like-for-like basis. Revenues in existing stores have already started to recover and Bed Bath & Beyond saw 4% total comp sales growth in the 4th quarter 2020. Bed Bath & Beyond's revenues, however, should stabilize above $8b annually, with potential upside coming from digital channel sales.Ī general reopening of the US economy should bring sales growth back to the retailer’s chain stores as customers get more comfortable to go out and shop again. And more store closures are a possibility as the retailer drags itself out of the pandemic hole. Net sales in the 4th quarter 2020, which ended on February 27, 2021, declined 16% to $2.6b, in part because of permanent store closures.īed Bath & Beyond expects to have net sales of $8.0b to $8.2b in fiscal year 2021 which is 27% lower than what the retailer had in revenues before the pandemic. Bed Bath & Beyond’s net sales cratered 49%to $1.3b in the firm’s 1st fiscal quarter 2020, which ended on May 30, 2020, and included the worst three months of the pandemic. According to Statista, Bed Bath & Beyond’s store count dropped 32% to 1,020 in 2021 amid the COVID-19 pandemic.Ī lower store count and declining foot traffic in the surviving stores left a big dent in Bed Bath & Beyond’s revenues last year. Bed Bath & Beyond now has just around a 1,000 retail stores that sell everything that makes your home homely including furniture, cookware, curtains, bed sheets, pillows and bath rugs. Just like GameStop ( GME) and AMC, Bed Bath & Beyond became a short seller target in 2020 because of the pandemic’s impact on the firm’s revenue base. More than 31% of Bed Bath & Beyond’s shares are being shorted… But, as this article intends to clarify, Bed Bath & Beyond is not overvalued and offers post-pandemic recovery potential at a good price.īed Bath & Beyond experienced volatility spikes in January and June as chatter about the company picked up on WallStreetBets, but momentum has started to fade this week.īed Bath & Beyond is even more heavily shorted than AMC Entertainment ( AMC) which has started to make the retail chain interesting to the Robinhood and WallStreetBets armies. There are good reasons to short a company, the biggest one relating to the possibility of the stock being overvalued. Meme stock character and short interestīuying a stock or a company just because it is shorted by hedge funds is not a good way to invest money. A high short interest and growing social media interest put Bed Bath & Beyond on the Reddit army's radar screen, but the home goods retailer has more to offer than just a high short interest. Photo by sanfel/iStock Editorial via Getty Imagesīed Bath & Beyond (NASDAQ: BBBY) has striking similarities to other meme stocks that blew up in 2021.
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