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How Bed Bath & Beyond’s Valuation Stacks Up with Peers

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Valuation multiple

Bed Bath & Beyond (BBBY) posted its third-quarter earnings on January 9, 2019. Although the company’s sales fell short of analysts’ expectations, the company’s management provided optimistic 2019 EPS guidance for 2019, which led to a rise in the company’s stock price. The increase in BBBY’s stock price has also raised its valuation multiple. As of March 26, BBBY was trading at a forward PE multiple of 9.6x compared to 6.8x at the beginning of 2019. On the same day, peers Williams-Sonoma (WSM) and RH (RH) were trading at 12.4x and 12.9x, respectively.

Analysts’ recommendations

After the three activist funds nominated 16 directors for BBBY’s board, KeyBanc Capital Markets and Raymond James upgraded the stock, while Telsey Advisory Group and Jefferies raised their price targets.

KeyBanc Capital Markets upgraded BBBY from “underweight” to “sector weight,” while Raymond James raised its rating from “market perform” to “strong buy.” Also, Telsey Advisory Group raised its price target from $13 to $18, while Jefferies hiked the price target from $14 to $17.

Of the total 22 analysts that cover BBBY, 9.1% are favoring a “buy,” while 59.1% have given the stock a “hold” rating, and the remaining 31.8% have given the stock a “sell” rating. On average, analysts have a 12-month price target of $14.94 for BBBY, which represents a fall of 11.7% from its stock price of $16.92.

Peer comparisons

Of the 24 analysts that cover Williams-Sonoma, 4.2% are favoring a “buy” rating, while 75.0% are recommending a “hold,” and 20.8% are recommending a “sell” recommendation. Analysts’ average 12-month price target for the stock stood at $56.13, which represents a potential fall of 2.1% from its stock price of $57.33.

Of the 22 analysts that follow RH, 45.5% are favoring a “buy,” while 50% have given it a “hold” rating and 4.5% have given it “sell” rating. Analysts’ average 12-month price target stood at $160.67, which represents a potential upside of 20.2% from its March 26 closing price of $130.55.

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