Best Buy Co., Inc. (NYSE:BBY)
CAPS Rating:
The Company is a specialty retailer of consumer electronics, home-office products, entertainment software, appliances and related services.
Taking it to the street
The Company is a specialty retailer of consumer electronics, home-office products, entertainment software, appliances and related services.
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Straight from the Earnings Announcement:
"Fiscal 2012 free cash flow was $2.5 billion, primarily driven by effective management of inventory levels and the timing of several working capital items at the end of the previous fiscal year. During the fourth quarter, the company repurchased $317 million, or 12.8 million shares, of its common stock at an average price of $24.76 per share. For the full year, the company repurchased $1.5 billion, or 54.6 million shares, of its common stock at an average price of $27.47 per share."
Even if you take out the $712MM in positive working capital changes, they still generated $1.8B in FCF for 2012. For a company whose market equity is trading for $7.7B, that's a 23% cash flow yield on the market equity. I don't care if this company doesn't last ten more years.
Companies like Staples and Barnes and Noble are proving that the best in breed in a dying industry can still hang around for a while. I second valuemoney's comment about Best Buy still being around for another 10 years.
I think you should check out DTV. Look at their share repurchase. Over the last 5 years they bought roughly 40% of the outstanding float back. Earnings currently are yielding over 7.4% and at next years estimate earnings yield is over 10%. Growth in North American is small but in South America they are growth at a good clip. Earnings growth over the next 5 years is over 20% on the estimates. I would reason share price will go up the same. Just look at share price over the last 5 years. It has more than doubled and the price level is still cheap. I just bought shares of DTV in my RL portfolio last week for full disclosure. I can see why Berkshire took a stake in it. Last quarter they increased their stake by 13% I think. Current position for Berkshire is 1.1 plus billion as of last quarters filing I think. Just an idea for CAPS. Check it out.
One more thing. I see you have me as a favorite, the valuemoney profile is not a very good one to follow since it seems you are only interested in green thumb picks. I finally made a new profile with no GARBAGE picks. It is valuemoneygreen. I screen roughly 100 companies and am going to green thumb them when I think they will beat the market over a long time frame. I will try to make a pitch for all of them. My profile statement says what I am looking for and I also blogged it on my valuemoney caps page. Well good luck and have a good day.