![]() ![]() Thus, when all is said and done, even after these share buybacks, its EBITDA to gross debt will still end fiscal 2021 at less than 3x to gross EBITDA. This equates to a further 11% of the company to be repurchased over the coming 12 months, on top of the 13% just repurchased over the last several months. Moreover, a further $325 million of shares are expected to be repurchased over the coming 12 months. This implies that Bed Bath has deployed approximately $375 million towards share repurchases. Keep in mind, that Bed Bath has 117.3 million shares outstanding after the company bought back 13% of its shares at $23 per share these past several months. Balance Sheet Continues to Steadily Improve Going ahead, Bed Bath charges that it's going to make about $500 to $525 million of EBITDA in 2020, implying 6.3% of EBITDA margins. As noted already, those businesses were sold and have returned $600 million of cash proceeds. During 2020, Bed Bath's EBITDA was $561 million, but this included several divested non-core banner business units. Nonetheless, I seriously can't see a rational argument for why the stock remains this cheaply valued. ![]() Indeed, we knew this information already back in January, so I can't understand why the market reacted as poorly to a company that's reaffirming its guidance. On the surface, this is very disappointing. Consequently, when Bed Bath is guiding for at the midpoint $8.1 billion in net sales, it's essentially stating that 2021 will be a flat year of revenue growth rates. I presumed at the time, that the market would reward this business with a higher valuation by now.Īs a reminder, Bed Bath sold 5 non-core business units during the past 12 months and generated $600 million in proceeds. I felt that to act then, simply because the share price was moving, but still selling my business at a discount was the wrong call to make. But the irony was that many nudged me to act, but I was too stubborn to be trigger-happy. ![]() With the benefit of hindsight, not selling this stock in those two weeks when there was all that MEME mania was a mistake. This is an investment that won't initiate many cool conversations, but beyond that, there's a lot to be attracted to Bed Bath & Beyond.įor instance, that this year it's guiding for more than $500 million of EBITDA.įurthermore, it has a very strong balance sheet and is repurchasing a meaningful amount of its shares. Photo by Kevin Brine/iStock Editorial via Getty Images Investment Thesisīed Bath & Beyond's ( BBBY) investment is an investment I've been making the case for Deep Value Returns Members. ![]()
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