Intrinsic value of Bed Bath&Beyond - BBBY

Previous Close

$29.26

  Intrinsic Value

$107.29

stock screener

  Rating & Target

str. buy

+267%

  Value-price divergence*

+24%

Previous close

$29.26

 
Intrinsic value

$107.29

 
Up/down potential

+267%

 
Rating

str. buy

 
Value-price divergence*

+24%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BBBY stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 4.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  0.93
  3.40
  3.56
  3.70
  3.83
  3.95
  4.06
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.82
  4.84
  4.86
  4.87
  4.89
  4.90
  4.91
  4.92
  4.92
Revenue, $m
  12,216
  12,631
  13,081
  13,566
  14,086
  14,642
  15,236
  15,868
  16,540
  17,253
  18,009
  18,809
  19,655
  20,549
  21,493
  22,488
  23,539
  24,646
  25,812
  27,041
  28,335
  29,696
  31,129
  32,637
  34,222
  35,890
  37,643
  39,486
  41,424
  43,460
  45,600
Variable operating expenses, $m
 
  11,151
  11,546
  11,971
  12,427
  12,915
  13,436
  13,991
  14,580
  15,206
  15,869
  16,501
  17,243
  18,027
  18,855
  19,729
  20,650
  21,622
  22,645
  23,723
  24,858
  26,052
  27,309
  28,632
  30,023
  31,486
  33,024
  34,641
  36,341
  38,127
  40,005
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  11,081
  11,151
  11,546
  11,971
  12,427
  12,915
  13,436
  13,991
  14,580
  15,206
  15,869
  16,501
  17,243
  18,027
  18,855
  19,729
  20,650
  21,622
  22,645
  23,723
  24,858
  26,052
  27,309
  28,632
  30,023
  31,486
  33,024
  34,641
  36,341
  38,127
  40,005
Operating income, $m
  1,135
  1,480
  1,535
  1,595
  1,659
  1,727
  1,800
  1,877
  1,960
  2,047
  2,140
  2,308
  2,412
  2,521
  2,637
  2,759
  2,888
  3,024
  3,167
  3,318
  3,477
  3,644
  3,820
  4,005
  4,199
  4,404
  4,619
  4,845
  5,083
  5,333
  5,595
EBITDA, $m
  1,426
  1,734
  1,796
  1,863
  1,934
  2,010
  2,092
  2,179
  2,271
  2,369
  2,473
  2,583
  2,699
  2,821
  2,951
  3,088
  3,232
  3,384
  3,544
  3,713
  3,891
  4,077
  4,274
  4,481
  4,699
  4,928
  5,169
  5,422
  5,688
  5,967
  6,261
Interest expense (income), $m
  81
  81
  88
  96
  105
  115
  125
  136
  147
  159
  172
  186
  201
  216
  233
  250
  268
  287
  307
  329
  351
  375
  399
  426
  453
  482
  512
  544
  578
  613
  651
Earnings before tax, $m
  1,066
  1,400
  1,447
  1,499
  1,553
  1,612
  1,675
  1,742
  1,813
  1,888
  1,968
  2,122
  2,211
  2,305
  2,405
  2,510
  2,620
  2,737
  2,860
  2,989
  3,126
  3,269
  3,420
  3,579
  3,746
  3,922
  4,107
  4,301
  4,505
  4,719
  4,945
Tax expense, $m
  381
  378
  391
  405
  419
  435
  452
  470
  489
  510
  531
  573
  597
  622
  649
  678
  707
  739
  772
  807
  844
  883
  923
  966
  1,011
  1,059
  1,109
  1,161
  1,216
  1,274
  1,335
Net income, $m
  685
  1,022
  1,057
  1,094
  1,134
  1,177
  1,223
  1,271
  1,323
  1,378
  1,436
  1,549
  1,614
  1,683
  1,755
  1,832
  1,913
  1,998
  2,088
  2,182
  2,282
  2,387
  2,497
  2,613
  2,735
  2,863
  2,998
  3,140
  3,289
  3,445
  3,610

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  488
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  6,846
  6,575
  6,809
  7,062
  7,332
  7,622
  7,931
  8,260
  8,610
  8,981
  9,375
  9,791
  10,232
  10,697
  11,188
  11,707
  12,253
  12,830
  13,437
  14,077
  14,750
  15,459
  16,205
  16,989
  17,815
  18,683
  19,595
  20,555
  21,564
  22,624
  23,738
Adjusted assets (=assets-cash), $m
  6,358
  6,575
  6,809
  7,062
  7,332
  7,622
  7,931
  8,260
  8,610
  8,981
  9,375
  9,791
  10,232
  10,697
  11,188
  11,707
  12,253
  12,830
  13,437
  14,077
  14,750
  15,459
  16,205
  16,989
  17,815
  18,683
  19,595
  20,555
  21,564
  22,624
  23,738
Revenue / Adjusted assets
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
  1.921
Average production assets, $m
  1,781
  1,844
  1,910
  1,981
  2,056
  2,138
  2,224
  2,317
  2,415
  2,519
  2,629
  2,746
  2,870
  3,000
  3,138
  3,283
  3,437
  3,598
  3,769
  3,948
  4,137
  4,336
  4,545
  4,765
  4,996
  5,240
  5,496
  5,765
  6,048
  6,345
  6,658
Working capital, $m
  1,778
  1,339
  1,387
  1,438
  1,493
  1,552
  1,615
  1,682
  1,753
  1,829
  1,909
  1,994
  2,083
  2,178
  2,278
  2,384
  2,495
  2,612
  2,736
  2,866
  3,003
  3,148
  3,300
  3,459
  3,628
  3,804
  3,990
  4,186
  4,391
  4,607
  4,834
Total debt, $m
  1,492
  1,632
  1,784
  1,948
  2,124
  2,312
  2,512
  2,726
  2,953
  3,194
  3,449
  3,719
  4,005
  4,307
  4,626
  4,963
  5,317
  5,692
  6,086
  6,501
  6,938
  7,398
  7,882
  8,391
  8,927
  9,490
  10,082
  10,705
  11,360
  12,048
  12,771
Total liabilities, $m
  4,127
  4,267
  4,419
  4,583
  4,759
  4,947
  5,147
  5,361
  5,588
  5,829
  6,084
  6,354
  6,640
  6,942
  7,261
  7,598
  7,952
  8,327
  8,721
  9,136
  9,573
  10,033
  10,517
  11,026
  11,562
  12,125
  12,717
  13,340
  13,995
  14,683
  15,406
Total equity, $m
  2,719
  2,308
  2,390
  2,479
  2,574
  2,675
  2,784
  2,899
  3,022
  3,152
  3,291
  3,437
  3,591
  3,755
  3,927
  4,109
  4,301
  4,503
  4,716
  4,941
  5,177
  5,426
  5,688
  5,963
  6,253
  6,558
  6,878
  7,215
  7,569
  7,941
  8,332
Total liabilities and equity, $m
  6,846
  6,575
  6,809
  7,062
  7,333
  7,622
  7,931
  8,260
  8,610
  8,981
  9,375
  9,791
  10,231
  10,697
  11,188
  11,707
  12,253
  12,830
  13,437
  14,077
  14,750
  15,459
  16,205
  16,989
  17,815
  18,683
  19,595
  20,555
  21,564
  22,624
  23,738
Debt-to-equity ratio
  0.549
  0.710
  0.750
  0.790
  0.830
  0.860
  0.900
  0.940
  0.980
  1.010
  1.050
  1.080
  1.120
  1.150
  1.180
  1.210
  1.240
  1.260
  1.290
  1.320
  1.340
  1.360
  1.390
  1.410
  1.430
  1.450
  1.470
  1.480
  1.500
  1.520
  1.530
Adjusted equity ratio
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351
  0.351

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  685
  1,022
  1,057
  1,094
  1,134
  1,177
  1,223
  1,271
  1,323
  1,378
  1,436
  1,549
  1,614
  1,683
  1,755
  1,832
  1,913
  1,998
  2,088
  2,182
  2,282
  2,387
  2,497
  2,613
  2,735
  2,863
  2,998
  3,140
  3,289
  3,445
  3,610
Depreciation, amort., depletion, $m
  291
  254
  261
  268
  275
  283
  292
  301
  311
  322
  333
  275
  287
  300
  314
  328
  344
  360
  377
  395
  414
  434
  454
  476
  500
  524
  550
  576
  605
  635
  666
Funds from operations, $m
  1,013
  1,276
  1,317
  1,362
  1,409
  1,460
  1,515
  1,573
  1,634
  1,700
  1,769
  1,823
  1,901
  1,983
  2,069
  2,160
  2,257
  2,358
  2,465
  2,577
  2,696
  2,820
  2,951
  3,089
  3,234
  3,387
  3,547
  3,716
  3,893
  4,080
  4,276
Change in working capital, $m
  -29
  44
  48
  51
  55
  59
  63
  67
  71
  76
  80
  85
  90
  95
  100
  106
  111
  117
  124
  130
  137
  144
  152
  160
  168
  177
  186
  195
  205
  216
  227
Cash from operations, $m
  1,042
  1,232
  1,270
  1,310
  1,354
  1,401
  1,452
  1,506
  1,563
  1,624
  1,689
  1,739
  1,811
  1,888
  1,969
  2,055
  2,145
  2,241
  2,341
  2,447
  2,558
  2,676
  2,799
  2,929
  3,066
  3,210
  3,362
  3,521
  3,688
  3,864
  4,049
Maintenance CAPEX, $m
  0
  -178
  -184
  -191
  -198
  -206
  -214
  -222
  -232
  -241
  -252
  -263
  -275
  -287
  -300
  -314
  -328
  -344
  -360
  -377
  -395
  -414
  -434
  -454
  -476
  -500
  -524
  -550
  -576
  -605
  -635
New CAPEX, $m
  -374
  -63
  -66
  -71
  -76
  -81
  -87
  -92
  -98
  -104
  -110
  -117
  -124
  -131
  -138
  -145
  -153
  -162
  -170
  -179
  -189
  -199
  -209
  -220
  -231
  -243
  -256
  -269
  -283
  -297
  -312
Cash from investing activities, $m
  -492
  -241
  -250
  -262
  -274
  -287
  -301
  -314
  -330
  -345
  -362
  -380
  -399
  -418
  -438
  -459
  -481
  -506
  -530
  -556
  -584
  -613
  -643
  -674
  -707
  -743
  -780
  -819
  -859
  -902
  -947
Free cash flow, $m
  550
  991
  1,019
  1,049
  1,080
  1,115
  1,151
  1,191
  1,233
  1,279
  1,327
  1,359
  1,413
  1,471
  1,531
  1,596
  1,664
  1,735
  1,811
  1,891
  1,975
  2,063
  2,157
  2,255
  2,358
  2,467
  2,582
  2,702
  2,829
  2,962
  3,102
Issuance/(repayment) of debt, $m
  0
  140
  152
  164
  176
  188
  201
  214
  227
  241
  255
  270
  286
  302
  319
  336
  355
  374
  394
  415
  437
  460
  484
  509
  536
  563
  592
  623
  655
  688
  723
Issuance/(repurchase) of shares, $m
  -527
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -525
  140
  152
  164
  176
  188
  201
  214
  227
  241
  255
  270
  286
  302
  319
  336
  355
  374
  394
  415
  437
  460
  484
  509
  536
  563
  592
  623
  655
  688
  723
Total cash flow (excl. dividends), $m
  29
  1,131
  1,171
  1,212
  1,256
  1,303
  1,352
  1,405
  1,460
  1,519
  1,582
  1,629
  1,699
  1,773
  1,850
  1,932
  2,018
  2,109
  2,205
  2,306
  2,412
  2,523
  2,641
  2,764
  2,894
  3,030
  3,174
  3,325
  3,483
  3,650
  3,825
Retained Cash Flow (-), $m
  -159
  -77
  -82
  -89
  -95
  -102
  -108
  -116
  -123
  -130
  -138
  -146
  -155
  -163
  -172
  -182
  -192
  -202
  -213
  -224
  -236
  -249
  -262
  -275
  -290
  -305
  -320
  -337
  -354
  -372
  -391
Prev. year cash balance distribution, $m
 
  488
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,542
  1,089
  1,124
  1,161
  1,201
  1,244
  1,289
  1,338
  1,389
  1,444
  1,483
  1,544
  1,609
  1,678
  1,750
  1,826
  1,907
  1,992
  2,081
  2,175
  2,275
  2,379
  2,489
  2,604
  2,726
  2,854
  2,988
  3,129
  3,278
  3,434
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  1,478
  997
  978
  956
  931
  903
  871
  836
  798
  757
  704
  659
  612
  563
  514
  464
  415
  367
  320
  276
  235
  197
  163
  133
  106
  83
  64
  48
  36
  26
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Bed Bath & Beyond Inc., together with its subsidiaries, operates a chain of retail stores. It sells a range of domestics merchandise, including bed linens and related items, bath items, and kitchen textiles; and home furnishings, such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings, consumables, and juvenile products. It also provides various textile products, amenities, and other goods to institutional customers in the hospitality, cruise line, healthcare, and other industries. The company operates stores under the Bed Bath & Beyond (BBB); Christmas Tree Shops; Christmas Tree Shops andThat! or andThat! (CTS); Harmon or Harmon Face Values (Harmon); buybuy BABY (Baby); and World Market, Cost Plus World Market, and Cost Plus (Cost Plus World Market) names. As of February 27, 2016, the company had a total of 1,530 stores, including 1,020 BBB stores; 276 stores under the names of Cost Plus World Market; 105 Baby stores; 78 stores under the CTS names; and 51 stores under the Harmon names in 50 states, the District of Columbia, Puerto Rico, and Canada, as well as through bedbathandbeyond.com, bedbathandbeyond.ca, christmastreeshops.com, andthat.com, harmondiscount.com, facevalues.com, buybuybaby.com, buybuybaby.ca, worldmarket.com, and ofakind.com Websites. In addition, it operates PersonalizationMall.com that offers personalized gifts. Bed Bath & Beyond Inc. was founded in 1971 and is based in Union, New Jersey.

FINANCIAL RATIOS  of  Bed Bath&Beyond (BBBY)

Valuation Ratios
P/E Ratio 6.2
Price to Sales 0.4
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 4.1
Price to Free Cash Flow 6.4
Growth Rates
Sales Growth Rate 0.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14%
Cap. Spend. - 3 Yr. Gr. Rate 3.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 54.9%
Total Debt to Equity 54.9%
Interest Coverage 14
Management Effectiveness
Return On Assets 11.1%
Ret/ On Assets - 3 Yr. Avg. 13.2%
Return On Total Capital 16.6%
Ret/ On T. Cap. - 3 Yr. Avg. 20.1%
Return On Equity 26%
Return On Equity - 3 Yr. Avg. 28.8%
Asset Turnover 1.8
Profitability Ratios
Gross Margin 37.5%
Gross Margin - 3 Yr. Avg. 38.2%
EBITDA Margin 11.8%
EBITDA Margin - 3 Yr. Avg. 13.6%
Operating Margin 9.3%
Oper. Margin - 3 Yr. Avg. 11.4%
Pre-Tax Margin 8.7%
Pre-Tax Margin - 3 Yr. Avg. 10.8%
Net Profit Margin 5.6%
Net Profit Margin - 3 Yr. Avg. 6.9%
Effective Tax Rate 35.7%
Eff/ Tax Rate - 3 Yr. Avg. 36.2%
Payout Ratio 8.2%

BBBY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BBBY stock intrinsic value calculation we used $12216 million for the last fiscal year's total revenue generated by Bed Bath&Beyond. The default revenue input number comes from 2017 income statement of Bed Bath&Beyond. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BBBY stock valuation model: a) initial revenue growth rate of 3.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for BBBY is calculated based on our internal credit rating of Bed Bath&Beyond, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Bed Bath&Beyond.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BBBY stock the variable cost ratio is equal to 88.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BBBY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Bed Bath&Beyond.

Corporate tax rate of 27% is the nominal tax rate for Bed Bath&Beyond. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BBBY stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BBBY are equal to 14.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Bed Bath&Beyond operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BBBY is equal to 10.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2719 million for Bed Bath&Beyond - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 144.892 million for Bed Bath&Beyond is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Bed Bath&Beyond at the current share price and the inputted number of shares is $4.2 billion.

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Stock chart of BBBY Financial statements of BBBY Annual reports of BBBY
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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