dimanche 30 septembre 2018

Bed Bath and Beyond and the death of retail without any edge

The first time I entered a Bed Bath and Beyond shop was in 2012. It smelled good (something like soap) but there was nothing really special there. It was a kind of Walmart dedicated to home stuff (sheets, soap, beds), but the prices were higher than at Walmart. A kind of Sears, in other words.

But it was considered a great stock back then. I never bought a share, but I followed the company... 

On october 1st, 2013, a single share of Bed Bath and Beyond (BBBY) was selling for 77$.

Five years later, a single share is selling for 15$.

What happened? Up until 2013, things were going nicely for Bed Bath and Beyond. But, around 2014, growth started to slow down Then, there was stagnation. Then, there was negative growth. And that's the moment where investors chosed to leave the ship.

EPS tell everything:

2013: 4,56$
2014: 4,79$
2015: 5,07$
2016: 5,10$
2017: 4,58$
2018: 3,07$

As seen above, when things started to go wrong, they went wrong big time.

Some people may attribute the word "undervalued" to Bed Bath and Beyond because the PE is about 5. Personnaly, when a company has lost it's appeal, I don't use any word to describe it. I just look elsewhere.

3 commentaires:

  1. In case you guys have not noticed, a lot of the stocks in the business of making or selling homes, cars, recreational vehicles, etc. are hitting new 52 week lows. They are not doomed for good in the long term like some brick and mortar retailer that can no longer compete and has no edge...but they tend to be the first stocks to take a beating as interest rates start to rise and the cost of financing a home or auto purchase gets more expensive. These car, home, rv, and building materials stocks may seem like bargains but there may be more pain ahead for them...and eventually for the rest of the stock market. A major index like the dow that tracks 30 very big stocks is not indicative of what is going on in the overall stock market right now. The broader market is quietly correcting. Let's hope it does not get too loud.

    1. Could it be shift from smaller capital stock to larger capital stocks ?

    2. Yesterday the Dow rallied 122 points, however, the strength of the Dow is masking the market’s internal weakness. The Russell 2000 fell 1%. Declining stocks led by 8:5 on the NYSE and over 2:1 on the Nasdaq; declining stocks have led in six out of the last ten trading sessions.