Best Buy Co., Inc. (BBY) Discounted Future Market Cap

Best Buy Co., Inc.

BBY (NYSE)

(%)

Valuation
Best Buy Co., Inc. Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	79.89 USD
Estimated net income	1.28 Bil. USD
Estimated market capitalization	27.78 Bil. USD
Market capitalization discounted to present	16.83 Bil. USD
Shares Outstanding	210.7 Mil.
Earnings Per Share (EPS)	3.04 USD
Market Price	66.68 USD
Price to Earnings (PE) Ratio	21.78

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2016", "x": "2016-01-30", "y": 39528000000}, {"l": "2017", "x": "2017-01-28", "y": 39403000000}, {"l": "2018", "x": "2018-02-03", "y": 42151000000}, {"l": "2019", "x": "2019-02-02", "y": 42879000000}, {"l": "2020", "x": "2020-02-01", "y": 43638000000}, {"l": "2021", "x": "2021-01-30", "y": 47262000000}, {"l": "2022", "x": "2022-01-29", "y": 51761000000}, {"l": "2023", "x": "2023-01-28", "y": 46298000000}, {"l": "2024", "x": "2024-02-03", "y": 43452000000}, {"l": "2025", "x": "2025-02-01", "y": 41528000000}, {"l": "2026", "x": "2026-02-01", "y": 41737716400, "oy": 41737716400, "e": true, "d": 2026, "g": 0.505, "og": 0.505}, {"l": "2027", "x": "2027-02-01", "y": 41948491867, "oy": 41948491867, "e": true, "d": 2027, "g": 0.505, "og": 0.505}, {"l": "2028", "x": "2028-02-01", "y": 42160331751, "oy": 42160331751, "e": true, "d": 2028, "g": 0.505, "og": 0.505}, {"l": "2029", "x": "2029-02-01", "y": 42373241427, "oy": 42373241427, "e": true, "d": 2029, "g": 0.505, "og": 0.505}, {"l": "2030", "x": "2030-02-01", "y": 42587226296, "oy": 42587226296, "e": true, "d": 2030, "g": 0.505, "og": 0.505}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2016", "x": "2016-01-30", "y": 897000000}, {"l": "2017", "x": "2017-01-28", "y": 1228000000}, {"l": "2018", "x": "2018-02-03", "y": 1000000000}, {"l": "2019", "x": "2019-02-02", "y": 1464000000}, {"l": "2020", "x": "2020-02-01", "y": 1541000000}, {"l": "2021", "x": "2021-01-30", "y": 1798000000}, {"l": "2022", "x": "2022-01-29", "y": 2454000000}, {"l": "2023", "x": "2023-01-28", "y": 1419000000}, {"l": "2024", "x": "2024-02-03", "y": 1241000000}, {"l": "2025", "x": "2025-02-01", "y": 927000000}, {"l": "2026", "x": "2026-02-01", "y": 1250044606, "oy": 1250044606, "e": true, "d": 2026, "g": 34.85, "og": 34.85}, {"l": "2027", "x": "2027-02-01", "y": 1256357331, "oy": 1256357331, "e": true, "d": 2027, "g": 0.505, "og": 0.505}, {"l": "2028", "x": "2028-02-01", "y": 1262701935, "oy": 1262701935, "e": true, "d": 2028, "g": 0.505, "og": 0.505}, {"l": "2029", "x": "2029-02-01", "y": 1269078580, "oy": 1269078580, "e": true, "d": 2029, "g": 0.505, "og": 0.505}, {"l": "2030", "x": "2030-02-01", "y": 1275487427, "oy": 1275487427, "e": true, "d": 2030, "g": 0.505, "og": 0.505}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2026-02-01": 41, "2027-02-01": 42, "2028-02-01": 43, "2029-02-01": 44, "2030-02-01": 45}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2026-02-01	2027-02-01	2028-02-01	2029-02-01	2030-02-01

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2025 Feb 01	LTM Jan 15	2026 Feb 01	2027 Feb 01	2028 Feb 01	2029 Feb 01	2030 Feb 01
Revenue	41,528	41,825	41,738	41,948	42,160	42,373	42,587
Revenue Growth Rate	-4.43%	0.715%	0.505%	0.505%	0.505%	0.505%	0.505%
Net Income	927	645	1,250	1,256	1,263	1,269	1,275

Monetary values in USD

amounts except #

2025
Feb 01

LTM
Jan 15

2026
Feb 01

2027
Feb 01

2028
Feb 01

2029
Feb 01

2030
Feb 01

Revenue

41,528

41,825

41,738

41,948

42,160

42,373

42,587

Revenue Growth Rate

-4.43%

0.715%

0.505%

Net Income

927

645

1,250

1,256

1,263

1,269

1,275

Historical Values

Monetary values in USD amounts except #	Average	LTM Jan 15	2025 Feb 01	2024 Feb 03	2023 Jan 28	2022 Jan 29	2021 Jan 30	2020 Feb 01	2019 Feb 02	2018 Feb 03	2017 Jan 28	2016 Jan 30
Revenue	43,611	41,825	41,528	43,452	46,298	51,761	47,262	43,638	42,879	42,151	39,403	39,528
Cost of Revenue	33,699	32,420	32,143	33,849	36,386	40,121	36,689	33,590	32,918	32,275	29,963	30,337
Gross Profit	9,912	9,405	9,385	9,603	9,912	11,640	10,573	10,048	9,961	9,876	9,440	9,191
Gross Margin	22.76%	22.49%	22.6%	22.1%	21.41%	22.49%	22.37%	23.03%	23.23%	23.43%	23.96%	23.25%
Operating Income	1,887	1,295	1,721	1,574	1,795	2,997	2,391	2,009	1,900	1,843	1,854	1,375
Operating Margin	4.29%	3.1%	4.14%	3.62%	3.88%	5.79%	5.06%	4.6%	4.43%	4.37%	4.71%	3.48%
Net Income	1,329	645	927	1,241	1,419	2,454	1,798	1,541	1,464	1,000	1,228	897
Net Margin	3%	1.54%	2.23%	2.86%	3.06%	4.74%	3.8%	3.53%	3.41%	2.37%	3.12%	2.27%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Jan 15	2025 Feb 01	2024 Feb 03	2023 Jan 28	2022 Jan 29	2021 Jan 30	2020 Feb 01	2019 Feb 02	2018 Feb 03	2017 Jan 28	2016 Jan 30
Revenue	43,611	41,825	41,528	43,452	46,298	51,761	47,262	43,638	42,879	42,151	39,403	39,528
Revenue Growth Rate	0.505%	0.715%	-4.43%	-6.15%	-10.55%	9.52%	8.3%	1.77%	1.73%	6.97%	-0.316%	-2.01%
Net Income	1,329	645	927	1,241	1,419	2,454	1,798	1,541	1,464	1,000	1,228	897
Net Margin	3%	1.54%	2.23%	2.86%	3.06%	4.74%	3.8%	3.53%	3.41%	2.37%	3.12%	2.27%
Net Income Growth Rate	-1.32%	-30.42%	-25.3%	-12.54%	-42.18%	36.48%	16.68%	5.26%	46.4%	-18.57%	36.9%	-27.25%
Stockholders Equity	3,491	2,653	2,808	3,053	2,795	3,020	4,587	3,479	3,306	3,612	4,709	4,378
Equity Growth Rate	-4.13%	-5.52%	-8.03%	9.23%	-7.45%	-34.16%	31.85%	5.23%	-8.47%	-23.3%	7.56%	-12.35%
Return on Invested Capital (ROIC)	32.29%	16.9%	23.67%	21.46%	28.76%	62.37%	59.26%	29.3%	43.23%	24.53%	27.42%	18.34%
After-tax Operating Income	1,376	926	1,228	1,204	1,424	2,429	1,809	1,553	1,473	1,013	1,232	847
Income Tax Rate	27.89%	28.49%	28.64%	23.5%	20.69%	18.96%	24.36%	22.68%	22.46%	45.02%	33.54%	38.4%
Invested Capital	4,557	5,479	5,188	5,611	4,950	3,894	3,052	5,302	3,408	4,131	4,494	4,618