$BBBY: Undervalued and Overshorted

Yeah... Well it turns out BBBY is far from dead and has successfully rebranded itself into an undervalued e-commerce giant poised for massive future growth! ​ Fundamentals: Despite being in the middle of a digital transformation from a retail store into an e-commerce giant while dealing with a global pandemic and supply-chain shocks, BBBY has managed to grow at a rapid pace while maintaining stable gross margins and a strong balance sheet https://preview.redd.it/nnxg5ly14pk71.png?width=903&format=png&auto=webp&s=b50b848b70a3d734333fdd7e45d3abfea7445184 In Q1 2021, BBBY experienced 49.5% revenue growth while still increasing their gross margins to 32.4% through streamlining their operations. Additionally, their past 4 quarters of online sales have all had consecutive sales growth, breaking the seasonal trend and showing a great movement towards ecommerce Q2 should be even better for them as they have continued streamlining operations and expect to post over 2B in revenue BBBY has over 1.2 BILLION dollars of cash on-hand which they can use to continue moving towards e-commerce, create in-house products, and keep up growth. That cash alone is 40% of their ENTIRE market cap, not even including additional assets. Management has seen how undervalued their company is and has repurchased $130m of shares to take advantage of this, with more share purchases to come. This shows how strong of a position they are in and how confident management is that their stock will increase in the future. ​ https://preview.redd.it/roim01484pk71.png?width=1249&format=png&auto=webp&s=678d71fd485768434f1a2f6a50d0b97a98c0f768 Even though they are focusing on growth instead of profitability right now, BBBY’s P/E ratio is STILL in line with the S@P 500 average Ok... now that you understand how undervalued this company is, let me introduce to you the management ​ ​ Management: Management is one of, if not the most important factors for how well a company will do, and BBBY has some of the best management a company could hope for Mark Tritton, the current CEO, has had over 30 years of experience in retail and oversaw Target’s streamlining and digital transformation as Executive VP. He has a clear vision for the company and has the industry connections and know-how to get it done Gustavo Arnal, the current CFO, has had experience turning around struggling companies before, most notably Avon. He has experience leading WBA’s global division and can help the company reach international markets John Hartmann, the current COO, has had experience being the CEO of True Value Company which focused on hardwear. He also has experience working in Home Depot’s digital transformation program. He can help BBBY create some products of their own while guiding this digital push There are many more amazing people on the leadership team, but these 3 are the ones who stand out to me due to their unique abilities in certain fields Management is what creates and directs a company’s visions and operations. With these 3 people on their team, BBBY covers all needed areas; Digital transformation, global supply-chains, hardwear production, and financial streamlining ​ ​ Shorts: Despite being in such a good position, BBBY still has a 23% short interest left over from the whole meme stock surge in January(edited) ​ https://preview.redd.it/3vw8ucdd4pk71.png?width=1796&format=png&auto=webp&s=f59847892b2ab7babafd50d3d2275c3b07caa6d7 This is not enough to cause a squeeze, but what it has been doing for the past few months is providing a price floor (at around 26$) and upward momentum as shorts take the loss and move on. ​ Meme stocks: My play is based around the fundamentals of the company, but meme stocks are so closely correlated that it makes sense to mention them Price action with BBBY has been closely correlated with other meme stocks since the January squeeze. If my theory is correct and meme stocks have a resurgence, we could see BBBY mooning again ​ https://preview.redd.it/ub0opfck4pk71.png?width=1352&format=png&auto=webp&s=54c47d9edcfa08ab601610c1c877b5dbc7171a61 This play is more about how undervalued the company is, but if you believe that there will be a new meme stock cycle then buying short dated calls could work. The call options have such low open interest that they are trading way below what they should be Positions: 120 Shares, 25 30c 9/3, 25 29.5 9/10, 10 30c 9/17 TLDR: BBBY is undervalued and overshorted. This provides a great long term play as the company keeps doing better and shorts keep closing their positions If you believe there will be a new meme stock supercycle, there are plenty of cheap options you can purchase too.

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$BBBY: Undervalued and Overshorted

Aug 31, 2021

bullish

general Analysis

[3 min Read]

blog post cover photo

Yeah... Well it turns out BBBY is far from dead and has successfully rebranded itself into an undervalued e-commerce giant poised for massive future growth!

Fundamentals:

Despite being in the middle of a digital transformation from a retail store into an e-commerce giant while dealing with a global pandemic and supply-chain shocks, BBBY has managed to grow at a rapid pace while maintaining stable gross margins and a strong balance sheet



In Q1 2021, BBBY experienced 49.5% revenue growth while still increasing their gross margins to 32.4% through streamlining their operations. Additionally, their past 4 quarters of online sales have all had consecutive sales growth, breaking the seasonal trend and showing a great movement towards ecommerce

Q2 should be even better for them as they have continued streamlining operations and expect to post over 2B in revenue

BBBY has over 1.2 BILLION dollars of cash on-hand which they can use to continue moving towards e-commerce, create in-house products, and keep up growth. That cash alone is 40% of their ENTIRE market cap, not even including additional assets.

Management has seen how undervalued their company is and has repurchased $130m of shares to take advantage of this, with more share purchases to come. This shows how strong of a position they are in and how confident management is that their stock will increase in the future.



Even though they are focusing on growth instead of profitability right now, BBBY's P/E ratio is STILL in line with the S@P 500 average

Ok... now that you understand how undervalued this company is, let me introduce to you the management

Management:

Management is one of, if not the most important factors for how well a company will do, and BBBY has some of the best management a company could hope for

Mark Tritton, the current CEO, has had over 30 years of experience in retail and oversaw Target's streamlining and digital transformation as Executive VP. He has a clear vision for the company and has the industry connections and know-how to get it done

Gustavo Arnal, the current CFO, has had experience turning around struggling companies before, most notably Avon. He has experience leading WBA's global division and can help the company reach international markets

John Hartmann, the current COO, has had experience being the CEO of True Value Company which focused on hardwear. He also has experience working in Home Depot's digital transformation program. He can help BBBY create some products of their own while guiding this digital push

There are many more amazing people on the leadership team, but these 3 are the ones who stand out to me due to their unique abilities in certain fields

Management is what creates and directs a company's visions and operations. With these 3 people on their team, BBBY covers all needed areas; Digital transformation, global supply-chains, hardwear production, and financial streamlining

Shorts:

Despite being in such a good position, BBBY still has a 23% short interest left over from the whole meme stock surge in January(edited)



This is not enough to cause a squeeze, but what it has been doing for the past few months is providing a price floor (at around 26$) and upward momentum as shorts take the loss and move on.

Meme stocks: My play is based around the fundamentals of the company, but meme stocks are so closely correlated that it makes sense to mention them

Price action with BBBY has been closely correlated with other meme stocks since the January squeeze. If my theory is correct and meme stocks have a resurgence, we could see BBBY mooning again



This play is more about how undervalued the company is, but if you believe that there will be a new meme stock cycle then buying short dated calls could work. The call options have such low open interest that they are trading way below what they should be

Positions:

120 Shares, 25 30c 9/3, 25 29.5 9/10, 10 30c 9/17

TLDR:

BBBY is undervalued and overshorted. This provides a great long term play as the company keeps doing better and shorts keep closing their positions

If you believe there will be a new meme stock supercycle, there are plenty of cheap options you can purchase too.

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BBBY

Bed Bath & Beyond Inc.

6.38

-0.16
-2.30%

Return

-76.87%
Change % Since Posting
-21.23
Change Since Posting
27.61
Price When Posted

Metrics

30.00
Target Price
9/ 10
Confidence
2-6 Months
Timeframe
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Filing
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