DCF Studio

    BBY · NYQ · Consumer Cyclical

    Best Buy Co., Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 93.01

    Market price

    USD 96.14

    Implied upside

    -3.3%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-01-31

    Value Per Share

    Perpetuity growth
    USD 93.01-3.3%
    Exit multiple
    USD 95.94-0.2%
    Market price
    USD 96.14

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 42.7bnUSD 43.4bnUSD 44.1bnUSD 45.0bnUSD 45.9bnUSD 46.8bnUSD 47.8bnUSD 48.9bnUSD 50.1bnUSD 51.4bn+2.1%
    EBITUSD 1.8bnUSD 1.8bnUSD 1.8bnUSD 1.9bnUSD 1.9bnUSD 1.9bnUSD 2.0bnUSD 2.0bnUSD 2.1bnUSD 2.1bn+2.1%
    NOPATUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.6bnUSD 1.7bn+2.1%
    Add depreciation & amortisationUSD 873.2mUSD 887.7mUSD 903.4mUSD 920.4mUSD 938.6mUSD 958.1mUSD 979.1mUSD 1.0bnUSD 1.0bnUSD 1.1bn+2.1%
    Less capital expenditureUSD -770.9mUSD -799.8mUSD -830.2mUSD -862.4mUSD -896.4mUSD -932.4mUSD -970.5mUSD -1.0bnUSD -1.1bnUSD -1.1bn+4.0%
    Capex, % of revenue1.8%1.8%1.9%1.9%2.0%2.0%2.0%2.1%2.1%2.1%-
    Less increase in working capitalUSD -27.7mUSD -20.1mUSD -21.8mUSD -23.4mUSD -25.2mUSD -27.1mUSD -29.0mUSD -31.1mUSD -33.2mUSD -35.5m+2.8%
    Free cashflow to firmUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.6bn+0.9%
    Discount factor0.95880.88150.81040.74500.68500.62970.57890.53220.48930.4498-
    Present valueUSD 1.4bnUSD 1.3bnUSD 1.2bnUSD 1.1bnUSD 1.0bnUSD 962.4mUSD 893.1mUSD 829.5mUSD 771.2mUSD 717.5m-
    Present Value Of The ForecastUSD 10.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.139Reported 1.208, pulled toward 1.0 (Blume)
    Cost of equity9.71%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 37.2x interest cover. Book interest / average debt was lower, at 1.1%.
    Market capitalisationUSD 20.2bn83.0% of capital
    Total debtUSD 4.1bn17.0% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.77%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 93.01

    54% of EV

    Forecast FCFF, final year
    USD 1.6bn
    Capex at depreciation, working capital in reinvestment
    USD 1.7bn
    Less reinvestment at g/ROIC (7.3% of NOPAT)
    USD -127.8m
    Capitalised
    USD 1.6bn
    ROIC (reported)
    34.1%
    Terminal value, undiscounted
    USD 26.4bn
    Terminal value, discounted
    USD 11.9bn
    Enterprise value
    USD 22.1bn
    Less net debt
    USD 2.4bn
    Equity value
    USD 19.7bn

    Exit at 8.7x EBITDA

    Value per shareUSD 95.94

    55% of EV

    Terminal value, undiscounted
    USD 27.8bn
    Terminal value, discounted
    USD 12.5bn
    Enterprise value
    USD 22.7bn
    Less net debt
    USD 2.4bn
    Equity value
    USD 20.3bn

    Spread between methods: 3%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.77%123.06130.25139.19150.58165.54
    7.77%102.15106.50111.73118.11126.05
    8.77%87.0089.7693.0196.86101.49
    9.77%75.5177.3279.4181.8584.72
    10.77%66.5167.7169.0970.6872.52

    Outlined: this model. Green text: above today's price of 96.14. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-3.4%2.1%2.5%
    EBIT margin4.2%4.1%4.3%
    Discount rate-8.8%8.6%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.