I was fiddling around the StockCentral website last night and came upon an old post in November 2006 by Irving Roth who asked for comments on his SSG for BBBY.
Although his post was viewed over 500 times, no one provided any feedback. These comments are late, I realize, and BBBY’s price has since sunk some $9.00 per share. But, compared to a current Take Stock analysis for BBBY, Irving’s 2006 analysis looks a lot better to me.
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Armin-1
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Armin-2
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Take Stock
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Irving Roth
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Date
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4-11-08
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4-11-08
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4-11-08
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11-13-06
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Data
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S&P
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Hemscott
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Hemscott
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S&P
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Price
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$30.23
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$30.23
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$30.23
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$39.56
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Sales Growth
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10.0%
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10.0%
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13.2%
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13.0%
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EPS Growth
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10.0%
(thru 2007)
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10.0%
(thru 2006)
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08.6%
(thru 2006)
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13.6%
(thru 2005)
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High PE
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19.0
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19.0
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28.5
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24.0
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High Price
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$62.10
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$66.30
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$89.77
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$87.10
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….Value Line Estimated High Price = $65-85 as of 2-8-08….
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Low PE
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13.6
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13.6
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19.1
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13.0
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Low Price
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$24.50
recent severe low price option
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$24.50
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$41.26
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$25.00
grow comp option
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Up/Down
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5.6
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6.3
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impossible to compute
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3.3
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Total Return
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15.5%
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17.0%
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24.3%
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17.1%
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Buy Under
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$30.87
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$32.96
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$44.89
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$40.53
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Quality
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S&P =
A-
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N/A
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5.3 =
acceptable
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S&P =
A-
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PTPM-5yr ave
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14.6%
trend down
(thru 2007)
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14.7%
trend down
(thru 2006)
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14.3%
trend N/A
(thru 2006)
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14.3%
trend up
(thru 2005)
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ROE-5yr ave
end equity
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22.0%
trend N/A
(thru 2006)
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21.5%
trend even
(thru 2006)
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N/A
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22.1%
trend up
(thru 2005)
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ROE-5yr ave
begin equity
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25.0%
trend down
(thru 2006)
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25.0%
trend down
(thru 2006)
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22.1%
trend even
(thru 2006)
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26.0%
trend even
(thru 2005)
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- It is impossible to calculate an Upside/Downside Ratio for Take Stock because its Forecast Low Price ($41.26) is higher than its Present Price ($30.23). Maybe the designers of Take Stock don’t care about this abnormality since Take Stock doesn’t utilize the Upside/Downside concept.
- Instead of an Upside/Downside Ratio, Take Stock uses what it calls a Risk Index that, for BBBY, works out to – 22.5% (that’s a negative 22.5%) which seems meaningless to me, but Take Stock says its “reasonable.”
- The analysts are currently estimating long-term EPS at around 13.5-14.5% with S&P and FactSet CallStreet high at 15.00% and Reuters low at 12.57%. First Call is 12.62%, Value Line is 14.50%, and Zacks is 14.61%. Reuters less one standard deviation is 12.57 – 3.33 = 9.24% and is the basis (rough) for my 10.0% SSG estimate.
- It’s here that Irving might lower his 13.6% EPS estimate since BBBY’s earnings growth has declined for the last 10 consecutive years with -5.6% growth in 2007 (using S&P data)….but (with Hemscott data) 8.8% growth in 2006 as 2007 is not reported yet.
- The EPS data reported by Hemscott and S&P are identical except for 2006 where Hemscott reported $2.09 and S&P reported $2.15. Value Line also reported $2.15 with no explanatory footnote, and maybe someone who has read BBBY’s 10K report for 2006 can explain the difference.
- Take Stock projected a Forecast High Price of $89.77, which is slightly higher than the high end of Value Line’s estimate. Irving’s SSG, done when BBBY’s future looked brighter some 1.5 years earlier, estimated a slightly more cautious and lower Forecast High Price of $87.77.
- The major difference in the four SSGs is Take Stock’s $41.26 Forecast Low Price which is a whopping 65% higher than the Low Price of the other three.
Armin |