Dated 04 Mar 2017
Typical P/E ratio: 14
Best Buy is a retail business. It may be affected by competition from online and overseas China. Earning growth rate is estimated to be 5%.
- Determine a future stock price.
Future stock price = Future EPS x Future P/E Ratio
Future EPS = Present EPS x (1+ EPS growth rate)^number of years
= $3.25 x (1 + 5%)^5 years
Future P/E Ratio is 14.
Therefore, Future stock price = $4.15 x 14 = $58.07
- Present Intrinsic Value = Future stock price / (1 + MARR)^number of years
= $58 / (1 + 15%)^5 years
- 01 Mar
- 24 May
- 23 Aug
- 17 Nov
Support Resistance Level
$10, $14, $22, $26, $34, $37, $40, $43, $49
BBY has been side way for the last quarter from Jan-Mar 2017, even after the earnings and dividend.
Current it is trading in the middle of the range at $44.54. The VIX is at a low, immediately after the earnings.
VIX is expected to rise from the dividend date to the next earning.
There is probably no big news to move the stock for the next two months.
Queuing up for a Calendar at strike 45 +1 May -1 Apr at a price of $0.59. Spread price is expected to be sold for about $1 if the stock price remains.