Group5 BestBuy

COMPANY:
BEST BUY (BBY)
GROUP MEMBERS
DAVID CHIEN
JAY TRAN
JEFF CHEN
JON WILSON
TRAN PHAM
EPS
Stkgrph
Executive Suggestions
TABLE OF CONTENT
SHEET NAME
Beta
Moving Averages
Fama-French
2011
2012
2013
OLS regression
LOGEST
Firm Value
ROIC
Major Ratios
BBY Value
Competitor
EPS
Stkgrph
TABLE OF CONTENT
CONTENT
Beta Calculation
Beta Calculation using Moving Averages
Beta Calculation using Fama-French
2011 Forecast
2012 Forecast
2013 Forecast
Sales growth rate using OLS regression
Sales growth rate using LOGEST
Firm Value
ROIC v.s WACC / EVA v.s MVA
Major sales ratios
Best Buy Corporation Value
HHG Financial information
Dividend Fundamentals
Best Buy Stock Graph
Adj Close
Adj Close
(X value) (Y value)
S&P500
BBY
Km
Ks
1104.49
36.1
2.85%
-0.41%
1073.87
36.25
-3.70%
-7.12%
1115.1
39.03
1.78%
-7.56%
1095.63
42.22
5.74%
12.20%
1036.19
37.63
-1.98%
2.14%
1057.08
36.84
3.57%
3.40%
1020.62
35.63
3.36%
-2.92%
987.48
36.7
7.41%
12.06%
919.32
32.75
0.02%
-4.60%
919.14
34.33
5.31%
-8.53%
872.81
37.53
9.39%
1.43%
797.87
37
8.54%
31.72%
735.09
28.09
-10.99%
2.86%
825.88
27.31
-8.57%
0.18%
903.25
27.26
0.78%
35.76%
896.24
20.08
-7.48% -22.98%
968.75
26.07
-16.94% -28.02%
1166.36
36.22
-9.08% -16.23%
1282.83
43.24
1.22%
12.72%
1267.38
38.36
-0.99%
0.63%
1280
38.12
-8.60% -15.19%
1400.38
44.95
1.07%
8.55%
1385.59
41.41
4.75%
4.07%
1322.7
39.79
-0.60%
-3.61%
1330.63
41.28
-3.48% -11.74%
1378.55
46.77
-6.12%
-7.18%
1468.36
50.39
-0.86%
3.13%
1481.14
48.86
-4.40%
5.21%
1549.38
46.44
1.48%
5.71%
1526.75
43.93
3.58%
4.72%
1473.99
41.95
1.29%
-1.46%
1455.27
42.57
-3.20%
-4.25%
1503.35
44.46
-1.78%
-3.35%
1530.62
46
3.25%
3.51%
1482.37
44.44
4.33%
-4.06%
1420.86
46.32
1.00%
4.82%
1406.82
44.19
-2.18%
-7.76%
1438.24
47.91
1.41%
2.46%
1418.3
46.76
1.26% -10.34%
1400.63
52.15
1.65%
-0.52%
1377.94
52.42
3.15%
3.17%
1335.85
50.81
2.46%
14.15%
1303.82
44.51
2.13%
3.66%
1276.66
42.94
0.51% -17.31%
1270.2
51.93
0.01%
3.63%
Firm Cost of Equity (Ks)
Date
2/1/2010
1/4/2010
12/1/2009
11/2/2009
10/1/2009
9/1/2009
8/3/2009
7/1/2009
6/1/2009
5/1/2009
4/1/2009
3/2/2009
2/2/2009
1/2/2009
12/1/2008
11/3/2008
10/1/2008
9/2/2008
8/1/2008
7/1/2008
6/2/2008
5/1/2008
4/1/2008
3/3/2008
2/1/2008
1/2/2008
12/3/2007
11/1/2007
10/1/2007
9/4/2007
8/1/2007
7/2/2007
6/1/2007
5/1/2007
4/2/2007
3/1/2007
2/1/2007
1/3/2007
12/1/2006
11/1/2006
10/2/2006
9/1/2006
8/1/2006
7/3/2006
6/1/2006
1270.09
1310.61
1294.87
1280.66
1280.08
1248.29
1249.48
1207.01
1228.81
1220.33
1234.18
1191.33
1191.5
1156.85
1180.59
1203.6
50.11
53.57
52.81
50.85
47.83
41.05
45.46
41.71
41.03
44.84
48.04
42.99
34.08
31.52
33.74
33.75
-3.09%
1.22%
1.11%
0.05%
2.55%
-0.10%
3.52%
-1.77%
0.69%
-1.12%
3.60%
-0.01%
3.00%
-2.01%
-1.91%
-6.46%
1.44%
3.85%
6.31%
16.52%
-9.70%
8.99%
1.66%
-8.50%
-6.66%
11.75%
26.14%
8.12%
-6.58%
-0.03%
Firm Cost of Equity (Ks)
5/1/2006
4/3/2006
3/1/2006
2/1/2006
1/3/2006
12/1/2005
11/1/2005
10/3/2005
9/1/2005
8/1/2005
7/1/2005
6/1/2005
5/2/2005
4/1/2005
3/1/2005
2/28/2005
-20.00%
SUMMARY OUTPUT
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
Observations
0.55262067
0.305389605
0.293203457
0.095769177
59
ANOVA
df
Regression
Residual
Total
Intercept
1
57
58
SS
MS
F
0.229847265 0.22984727 25.06039
0.522788912 0.00917174
0.752636177
Standard Error t Stat

Coefficients
P-value
0.008557617 0.012470004 0.68625618 0.495334
0.028513693 1.345379445 0.268751486 5.00603537 5.67E-06
Year 2010
Krf: 10-Year treasury note
(^TNX) rate on Feb 28, 2010:
Beta
RPm
3.60%
1.345379445
6.00%
Year 2009
Year 2008
3.04%
3.53%
1.345379445 1.34537945
6.00%
6.00%
Ks = Krf + Beta * RPm =
11.67%
11.11%
11.60%
Shares outstanding:
421899
36.1
416,280
28.09
411795
41.28
Stock price on Feb. 28, 2010:

Total market value of common equity
*All numbers are in thousands
15,230,554
11,693,305 16,998,898
BETA
40.00%
30.00%
20.00%
y= 1.3453x + 0.0086
10.00%
y= 1.3453x + 0.0086
-20.00%
-15.00%
-10.00%
10.00%
-5.00%
0.00%
0.00%
-10.00%
-20.00%
-30.00%
-40.00%
Market Risk of Equity (Km)
Significance F
5.67392E-06
Lower 95%
Upper 95%
Lower 95.0% Upper 95.0%
-0.016413135
0.033528369 -0.01641314 0.033528369
0.807213881
1.883545009 0.807213881 1.883545009
Series1
5.00%
10.00%
15.00%
Linear (Series1)
Date
2/1/2010
1/4/2010
12/1/2009
11/2/2009
10/1/2009
9/1/2009
8/3/2009
7/1/2009
6/1/2009
5/1/2009
4/1/2009
3/2/2009
2/2/2009
1/2/2009
12/1/2008
11/3/2008
10/1/2008
9/2/2008
8/1/2008
7/1/2008
6/2/2008
5/1/2008
4/1/2008
3/3/2008
2/1/2008
1/2/2008
12/3/2007
11/1/2007
10/1/2007
9/4/2007
8/1/2007
7/2/2007
6/1/2007
5/1/2007
4/2/2007
3/1/2007
2/1/2007
1/3/2007
12/1/2006
11/1/2006
10/2/2006
9/1/2006
8/1/2006
7/3/2006
6/1/2006
5/1/2006
4/3/2006
3/1/2006
2/1/2006
1/3/2006
12/1/2005
11/1/2005
10/3/2005
9/1/2005
Adj Close
S&P500
1104.49
1073.87
1115.1
1095.63
1036.19
1057.08
1020.62
987.48
919.32
919.14
872.81
797.87
735.09
825.88
903.25
896.24
968.75
1166.36
1282.83
1267.38
1280
1400.38
1385.59
1322.7
1330.63
1378.55
1468.36
1481.14
1549.38
1526.75
1473.99
1455.27
1503.35
1530.62
1482.37
1420.86
1406.82
1438.24
1418.3
1400.63
1377.94
1335.85
1303.82
1276.66
1270.2
1270.09
1310.61
1294.87
1280.66
1280.08
1248.29
1249.48
1207.01
1228.81
Adj
(X-value)
Moving Averages Moving Averages
Close
Km
(Y-value) Ks
Ks
Km
36.1
0.0285
0.0285
36.25
-0.037
-0.0712
39.03
0.0178
-0.0756
42.22
0.0574
0.122
37.63
-0.0198
0.0214
0.50%
0.00938
36.84
0.0357
0.034
0.61%
0.01082
35.63
0.0336
-0.0292
1.45%
0.02494
36.7
0.0741
0.1206
5.38%
0.0362
32.75
0.0002
-0.046
2.02%
0.02476
34.33
0.0531
-0.0853
-0.12%
0.03934
37.53
0.0939
0.0143
-0.51%
0.05098
37
0.0854
0.3172
6.42%
0.06134
28.09
-0.1099
0.0286
4.58%
0.02454
27.31
-0.0857
0.0018
5.53%
0.00736
27.26
0.0078
0.3576
14.39%
-0.0017
20.08
-0.0748
-0.2298
9.51%
-0.03544
26.07
-0.1694
-0.2802
-2.44%
-0.0864
36.22
-0.0908
-0.1623
-6.26%
-0.08258
43.24
0.0122
0.1272
-3.75%
-0.063
38.36
-0.0099
0.0063
-10.78%
-0.06654
38.12
-0.086
-0.1519
-9.22%
-0.06878
44.95
0.0107
0.0855
-1.90%
-0.03276
41.41
0.0475
0.0407
2.16%
-0.0051
39.79
-0.006
-0.0361
-1.11%
-0.00874
41.28
-0.0348
-0.1174
-3.58%
-0.01372
46.77
-0.0612
-0.0718
-1.98%
-0.00876
50.39
-0.0086
0.0313
-3.07%
-0.01262
48.86
-0.044
0.0521
-2.84%
-0.03092
46.44
0.0148
0.0571
-0.97%
-0.02676
43.93
0.0358
0.0472
2.32%
-0.01264
41.95
0.0129
-0.0146
3.46%
0.00218
42.57
-0.032
-0.0425
1.99%
-0.0025
44.46
-0.0178
-0.0335
0.27%
0.00274
46
0.0325
0.0351
-0.17%
0.00628
44.44
0.0433
-0.0406
-1.92%
0.00778
46.32
0.01
0.0482
-0.67%
0.0072
44.19
-0.0218
-0.0776
-1.37%
0.00924
47.91
0.0141
0.0246
-0.21%
0.01562
46.76
0.0126
-0.1034
-2.98%
0.01164
52.15
0.0165
-0.0052
-2.27%
0.00628
52.42
0.0315
0.0317
-2.60%
0.01058
50.81
0.0246
0.1415
1.78%
0.01986
44.51
0.0213
0.0366
2.02%
0.0213
42.94
0.0051
-0.1731
0.63%
0.0198
51.93
0.0001
0.0363
1.46%
0.01652
50.11
-0.0309
-0.0646
-0.47%
0.00404
53.57
0.0122
0.0144
-3.01%
0.00156
52.81
0.0111
0.0385
-2.97%
-0.00048
50.85
0.0005
0.0631
1.75%
-0.0014
47.83
0.0255
0.1652
4.33%
0.00368
41.05
-0.001
-0.097
3.68%
0.00966
45.46
0.0352
0.0899
5.19%
0.01426
41.71
-0.0177
0.0166
4.76%
0.0085
41.03
0.0069
-0.085
1.79%
0.00978
8/1/2005
7/1/2005
6/1/2005
5/2/2005
4/1/2005
3/1/2005
2/28/2005
1220.33
1234.18
1191.33
1191.5
1156.85
1180.59
1203.6
44.84
48.04
42.99
34.08
31.52
33.74
33.75
-0.0112
0.036
-0.0001
0.03
-0.0201
-0.0191
-0.0666
0.1175
0.2614
0.0812
-0.0658
-0.0003
-2.84%
1.45%
4.88%
6.17%
6.55%
7.88%
6.91%
0.00244
0.00984
0.00278
0.01232
0.00692
0.00534
SUMMARY OUTPUT
Multiple R
0.488986956
R Square
0.239108243
Adjusted R Square
0.225017655
Standard Error
0.038215972
Observations
56
ANOVA
df
1
54
55
SS
0.024783078
0.078864868
0.103647946
MS
0.024783078
0.001460461
Coefficients
0.008323784
0.729684166
Standard Error
0.005107344
0.177134113
t Stat
1.629767698
4.119388137
Regression
Residual
Total
Intercept
X Variable 1

(^TNX) rate on Dec. 31, 2009:
3.60%
Beta
0.729684166
RPm
0.06
7.98%
Moving Averages
20.00%
15.00%
10.00%
y= 0.7297x + 0.0083
5.00%
0.00%
-0.1
-0.08
-0.06
-0.04
-0.02
0
-5.00%
-10.00%
-15.00%
0.02
0.04
0.06
-15.00%
Moving Averages (Ks) vs Actual (Ks)

40.00%
30.00%
20.00%
10.00%
0.00%
1
11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43
-10.00%
-20.00%
-30.00%
-40.00%
Moving Averages (Km) vs Actual (Km)

0.2
0.15
0.1
0.05
0
-0.05
-0.1
-0.15
-0.2
-0.25
-0.3
11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43
F
16.96935863
Significance F
0.000131276
P-value
0.10897082
0.000131276
Lower 95%
-0.001915824
0.374551653
Moving Averages
Linear (Moving Averages)
0.06
0.08
Upper 95%
0.018563393
1.084816679
Lower 95.0%
-0.001915824
0.374551653
Upper 95.0%
0.018563393
1.084816679
s (Ks) vs Actual (Ks)
Moving Averages (KS)

41 43 45 47 49 51 53 55
Actual (KS)
(Km) vs Actual (Km)
41 43 45 47 49 51 53 55
Actual (KM)
Moving Averages (KM)
Date
2/1/2010
1/4/2010
12/1/2009
11/2/2009
10/1/2009
9/1/2009
8/3/2009
7/1/2009
6/1/2009
5/1/2009
4/1/2009
3/2/2009
2/2/2009
1/2/2009
12/1/2008
11/3/2008
10/1/2008
9/2/2008
8/1/2008
7/1/2008
6/2/2008
5/1/2008
4/1/2008
3/3/2008
2/1/2008
1/2/2008
12/3/2007
11/1/2007
10/1/2007
9/4/2007
8/1/2007
7/2/2007
6/1/2007
5/1/2007
4/2/2007
3/1/2007
2/1/2007
1/3/2007
12/1/2006
11/1/2006
10/2/2006
9/1/2006
8/1/2006
7/3/2006
6/1/2006
5/1/2006
4/3/2006
3/1/2006
2/1/2006
1/3/2006
12/1/2005
11/1/2005
10/3/2005
9/1/2005
Adj Close
Adj Close
BestBuy
S&P500
X
Y
1104.49
36.1 0.02851 -0.0041
1073.87
36.25 -0.03697 -0.0712
1115.1
39.03 0.01777 -0.0756
1095.63
42.22 0.05736 0.12198
1036.19
37.63 -0.01976 0.02144
1057.08
36.84 0.03572 0.03396
1020.62
35.63 0.03356 -0.0292
987.48
36.7 0.07414 0.12061
919.32
32.75
0.0002
-0.046
919.14
34.33 0.05308 -0.0853
872.81
37.53 0.09393 0.01432
797.87
37
0.0854 0.31719
735.09
28.09 -0.10993 0.02856
825.88
27.31 -0.08566 0.00183
903.25
27.26 0.00782 0.35757
896.24
20.08 -0.07485 -0.2298
968.75
26.07 -0.16942 -0.2802
1166.36
36.22 -0.09079 -0.1623
1282.83
43.24 0.01219 0.12722
1267.38
38.36 -0.00986 0.0063
1280
38.12 -0.08596 -0.1519
1400.38
44.95 0.01067 0.08549
1385.59
41.41 0.04755 0.04071
1322.7
39.79 -0.00596 -0.0361
1330.63
41.28 -0.03476 -0.1174
1378.55
46.77 -0.06116 -0.0718
1468.36
50.39 -0.00863 0.03131
1481.14
48.86 -0.04404 0.05211
1549.38
46.44 0.01482 0.05714
1526.75
43.93 0.03579 0.0472
1473.99
41.95 0.01286 -0.0146
1455.27
42.57 -0.03198 -0.0425
1503.35
44.46 -0.01782 -0.0335
1530.62
46 0.03255 0.0351
1482.37
44.44 0.04329 -0.0406
1420.86
46.32 0.00998 0.0482
1406.82
44.19 -0.02185 -0.0776
1438.24
47.91 0.01406 0.02459
1418.3
46.76 0.01262 -0.1034
1400.63
52.15 0.01647 -0.0052
1377.94
52.42 0.03151 0.03169
1335.85
50.81 0.02457 0.14154
1303.82
44.51 0.02127 0.03656
1276.66
42.94 0.00509 -0.1731
1270.2
51.93 8.7E-05 0.03632
1270.09
50.11 -0.03092 -0.0646
1310.61
53.57 0.01216 0.01439
1294.87
52.81
0.0111 0.03854
1280.66
50.85 0.00045 0.06314
1280.08
47.83 0.02547 0.16516
1248.29
41.05 -0.00095
-0.097
1249.48
45.46 0.03519 0.08991
1207.01
41.71 -0.01774 0.01657
1228.81
41.03 0.00695
-0.085
Mkt-RF
0.0354
-0.0371
0.0292
0.0574
-0.0284
0.0452
0.0318
0.0824
-0.0028
0.0673
0.1104
0.0876
-0.1012
-0.0775
0.0206
-0.0855
-0.1854
-0.0996
0.0099
-0.0147
-0.0803
0.0222
0.0494
-0.0121
-0.0233
-0.0644
-0.007
-0.0527
0.0226
0.0377
0.0075
-0.0357
-0.0187
0.0348
0.0355
0.0087
-0.0178
0.015
0.0068
0.0195
0.033
0.0153
0.0209
-0.0059
-0.0044
-0.0353
0.0094
0.0154
-0.005
0.0365
0.0003
0.0373
-0.0235
0.0077
SMB
0.0145
0.0041
0.0591
-0.0278
-0.0432
0.0232
-0.0052
0.025
0.0271
-0.0265
0.0513
0.008
-0.0048
-0.0098
0.0416
-0.0359
-0.0215
-0.0019
0.0378
0.0375
0.0098
0.0286
-0.0156
0.0087
-0.0062
-0.007
0.0005
-0.0276
0.0011
-0.0244
-0.0012
-0.0271
0.0069
-0.0006
-0.0206
-0.0021
0.0139
0.0004
-0.0091
0.007
0.0169
-0.0121
0.0083
-0.0389
-0.0047
-0.0298
-0.0121
0.0351
-0.0035
0.0534
-0.0048
0.0097
-0.0103
-0.0065
HML
0.0274
0.0059
0.0072
0.0009
-0.0437
0.0158
0.0757
0.0481
-0.0243
0.0035
0.0574
0.0261
-0.0672
-0.0989
-0.0129
-0.0488
-0.0313
0.0449
0.0153
0.0367
-0.0099
-0.0033
0.0002
0.0023
0.0003
0.0307
-0.0011
-0.0103
-0.0198
-0.0214
-0.0239
-0.03
-0.0104
-0.0023
-0.011
0.0032
0.0031
0.0006
0.026
0.004
0.0049
-0.0045
-0.0165
0.033
0.0148
0.0273
0.0305
-0.0003
-0.0084
0.0112
0.0048
-0.018
-0.0071
0.0118
8/1/2005
7/1/2005
6/1/2005
5/2/2005
4/1/2005
3/1/2005
2/28/2005
1220.33
1234.18
1191.33
1191.5
1156.85
1180.59
1203.6
44.84
48.04
42.99
34.08
31.52
33.74
33.75
-0.01122 -0.0666
0.03597 0.11747
-0.00014 0.26144
0.02995 0.08122
-0.02011 -0.0658
-0.01912 -0.0003
-0.0089
0.0409
0.0092
0.0356
-0.0273
-0.019
0.0211
-0.0089
0.0277
0.0256
0.0296
-0.0395
-0.0134
-0.0078
0.014
-0.0046
0.0278
-0.0117
-0.005
0.0169
0.0288
Fama-French Three Factor Model

SUMMARY OUTPUT
Multiple R
0.654494206
R Square
0.428362665
Adjusted R Square
0.397739237
Standard Error
0.087657742
Observations
60
ANOVA
df
Regression
Residual
Total
Intercept
X Variable 1
X Variable 2
X Variable 3
Fama-French KS =
3
56
59
SS
0.322447946
0.430297267
0.752745213
MS
0.107482649
0.00768388
F
13.98807006
Coefficients
0.00584299
1.307822847
1.269609848
-1.009887597
Standard Error
0.011363784
0.266575055
0.521112023
0.449382174
t Stat
0.514176453
4.906021115
2.436347256
-2.247280057
P-value
0.609151824
8.37864E-06
0.018041867
0.028580556
11.25% (kRF + (kM - kRF)bi + (kSMB)ci + (kHML)di + a)
Ks Comparison
11.67
11.25
12
10
7.296
8
6
4
2
0
1
Original Beta
Moving Averages
Fama French
Significance F
6.40824E-07
Lower 95%
-0.016921405
0.773808847
0.225697032
-1.91010826
Upper 95%
0.028607385
1.841836848
2.313522665
-0.109666935
Lower 95.0%
-0.016921405
0.773808847
0.225697032
-1.91010826
Upper 95.0%
0.028607385
1.841836848
2.313522665
-0.109666935
Income Statement
Period Ending
2/27/2010
2/28/2009
Total Revenue
Cost of Revenue
49,694,000
37,534,000
45,015,000
34,017,000
Gross Profit
12,160,000
10,998,000
Operating Expenses
Research Development
9,873,000
8,984,000
52,000
0
255,000
0
9,925,000
9,239,000
2,235,000
1,870,000
Income from Continuing Operations

Total Other Income/Expenses Net
Earnings Before Interest And Taxes
Interest Expense
Income Before Tax
Income Tax Expense
Minority Interest
54,000
2,289,000
94,000
2,195,000
802,000
-77,000
35,000
1,905,000
94,000
1,811,000
674,000
-30,000
Net Income From Continuing Ops
1,317,000
1,114,000
0
0
0
0
0
0
0
0
1,317,000
0
1,003,000
0
$1,317,000
$1,003,000
27-Feb-10
28-Feb-09
1,826,000
90,000
2,020,000
498,000
11,000
1,868,000
Selling General and Administrative

Non Recurring
Others
Total Operating Expenses
Operating Income or Loss
Non-recurring Events
Discontinued Operations
Extraordinary Items
Effect Of Accounting Changes
Other Items
Net Income
Preferred Stock And Other Adjustments
Net Income Applicable To Common Shares
Balance Sheet
Period Ending
Assets
Current Assets
Cash And Cash Equivalents
Short Term Investments
Net Receivables
Inventory
Other Current Assets
5,486,000
1,144,000
4,753,000
1,062,000
Total Current Assets

Long Term Investments
Property Plant and Equipment
Goodwill
Intangible Assets
Accumulated Amortization
Other Assets
Deferred Long Term Asset Charges
10,566,000
324,000
4,070,000
2,452,000
438,000
0
452,000
0
8,192,000
395,000
4,174,000
2,203,000
495,000
0
367,000
0
Total Assets
18,302,000
15,826,000
7,817,000
698,000
463,000
7,119,000
837,000
479,000
8,978,000
1,104,000
1,256,000
0
644,000
0
8,435,000
1,126,000
1,109,000
0
513,000
0
11,982,000
11,183,000
Stockholders' Equity
Misc Stocks Options Warrants
Redeemable Preferred Stock
Preferred Stock
Common Stock
Retained Earnings
Treasury Stock
Capital Surplus
Other Stockholder Equity
0
0
0
42,000
5,797,000
0
441,000
40,000
0
0
0
41,000
4,714,000
0
205,000
-317,000
Total Stockholder Equity
6,320,000
4,643,000
$3,430,000
$1,945,000
Kd =Interest expense / (Long term debt + short-term debt payable) =
2010
5.22%
Liabilities
Current Liabilities
Accounts Payable
Short/Current Long Term Debt
Other Current Liabilities
Total Current Liabilities
Long Term Debt
Other Liabilities
Deferred Long Term Liability Charges
Minority Interest
Negative Goodwill
Total Liabilities
Net Tangible Assets
Total long-term capital = Market value of equity + Long term debt =

Wd = Long term debt / total long-term capital =
We = Market value of equity / total long-term capital =
T = Income tax expense / income before tax =
WACC = Wd Kd (1-T) + We Ke =
16,334,554
6.76%
93.24%
36.54%
11.11%
Average revenue growth rate =

3/1/2008
40,023,000
30,477,000
% of sales
75.53%
2/26/2011
54,581,667
41,225,667
9.84%
>>
>>
13,356,000
9,546,000
>>
7,385,000
19.37%
0.10%
10,571,153
57,114
0
>>
>>
>>
0
0
7,385,000
10,628,268
2,161,000
2,727,732
129,000
2,290,000
62,000
2,228,000
815,000
-3,000
54,000
2,781,732
94,000
2,687,732
982,033
-77,000
1,407,000
1,628,700
0
0
0
0
0
0
0
0
>>
>>
>>
>>
1,407,000
0
1,628,700
0
>>
$1,407,000
>>
>>
++
>>
>>
>>
1,628,700
1-Mar-08
1,438,000
64,000
549,000
3.67%
4.06%
2,005,597
90,000
2,218,678
>>
>>
>>
4,708,000
583,000
11.04%
2.30%
6,025,577
1,256,518
>>
>>
7,342,000
605,000
3,306,000
1,088,000
97,000
0
320,000
0
21.26%
11,596,370
324,000
4,470,306
2,693,167
481,080
0
496,457
0
>>
>>
>>
>>
>>
>>
>>
8.19%
4.93%
0.88%
0.00%
0.91%
20,061,379
12,758,000
15.73%
8,585,843
698,000
449,110
>>
++
>>
6,769,000
627,000
838,000
0
40,000
0
9,732,953
1,104,000
1,256,000
0
644,000
0
++
>>
>>
>>
>>
8,274,000
12,736,953
0
0
0
41,000
3,933,000
0
8,000
502,000
0
0
0
42,000
7,155,685
0
441,000
40,000
4,484,000
7,678,685
6,049,000
189,000
531,000
3%
.
$3,299,000
Liability + equity
20,415,638
Forecasted total assets =

Forecasted total claims =
Forecasted AFN =
20,061,379
20,415,638
-354,259
2009
4.79%
2008
7.60%
12,819,305
17,625,898
8.78%
91.22%
37.22%
3.56%
96.44%
36.58%
Additional short/current
Additional short-term debt
Additional long-term debt
10.40%
11.36%
Additional interest expense =
-137,221
-217,038
-18,480
>>
>>
>>
>>
++
>>
>>
2/26/2011
54,581,667
41,225,667
0
13,356,000
0
0
0
10,571,153
57,114
0
0
10,628,268
0
0
2,727,732
0
0
54,000
2,781,732
75,520
2,706,212
988,785
-77,000
0
1,640,427
0
0
0
0
0
0
0
0
1,640,427
0
0
>>
>>
>>
>>
13,356,000
2/26/2011
54,581,667
41,225,667
13,356,000
>>
>>
>>
>>
>>
10,571,153
57,114
0
>>
>>
>>
10,571,153
57,114
0
>>
>>
++
>>
>>
>>
10,628,268
10,628,268
2,727,732
2,727,732
54,000
2,781,732
74,909
2,706,824
989,008
-77,000
>>
>>
++
>>
>>
>>
1,640,816
>>
>>
>>
>>
0
0
0
0
>>
>>
>>
>>
0
0
0
0
1,640,829
>>
1,640,816
>>
>>
>>
54000
2,781,732
74,888
2,706,844
989,015
-77,000
1,640,829
1,640,816
>>
1,640,427
2,005,597
90,000
2,218,678
2/26/2011
54,581,667
41,225,667
2,005,597
90000
2,218,678
1,640,829
>>
>>
>>
2,005,597
90,000
2,218,678
6,025,577
1,256,518
0
11,596,370
324,000
4,470,306
2,693,167
481,080
0
496,457
0
0
20,061,379
0
0
0
8,585,843
560,779
449,110
0
9,595,732
886,962
1,256,000
0
644,000
0
0
12,382,694
0
0
0
0
0
42,000
7,167,412
0
441,000
40,000
>>
>>
6025576.998
1256518.426
>>
>>
6,025,577
1,256,518
>>
>>
>>
>>
>>
>>
>>
11,596,370
324,000
4,470,306
2,693,167
481,080
0
496,457
0
>>
>>
>>
>>
>>
>>
>>
11,596,370
324,000
4,470,306
2,693,167
481,080
0
496,457
0
20,061,379
20,061,379
>>
++
>>
8,585,843
556,236
449,110
>>
++
>>
8,585,843
556,086
449,110
++
>>
>>
>>
>>
9,591,189
879,777
1,256,000
0
644,000
0
++
>>
>>
>>
>>
9,591,039
879,540
1,256,000
0
644,000
0
12,370,967
>>
>>
>>
>>
++
>>
>>
0
0
0
42,000
7,167,801
0
441,000
40,000
12,370,578
>>
>>
>>
>>
++
>>
>>
0
0
0
42,000
7,167,814
0
441,000
40,000
7,690,412
7,690,801
7,690,814
20,073,107
20,061,767
20,061,392
20,061,379
20,073,107
-11,728
20,061,379
20,061,767
-388
20,061,379
20,061,392
-13
-4,543
-7,185
-150
-238
-5
-8
-612
-20
-1
Income Statement
Period Ending
Total Revenue
Cost of Revenue
2/26/2011
54,581,667
41,225,667
2/27/2010
49,694,000
37,534,000
Gross Profit
13,356,000
12,160,000
Operating Expenses
10,571,153
9,873,000
57,114
0
52,000
0
10628267.7
9925000
2,727,732
2,235,000

Interest Expense
Income Before Tax
Income Tax Expense
Minority Interest
54,000
2,781,732
74,888
2,706,844
989,015
-77,000
54,000
2,289,000
94,000
2,195,000
802,000
-77,000
1,640,829
1,317,000
0
0
0
0
0
0
0
0
1,640,829
0
1,317,000
0
$1,640,829
$1,317,000

Non Recurring
Others
Extraordinary Items
Other Items
Net Income
Balance Sheet
Period Ending
27-Feb-10
Assets
Current Assets
Net Receivables
2,005,597
90,000
2,218,678
1,826,000
90,000
2,020,000
Inventory
6,025,577
1,256,518
5,486,000
1,144,000

Goodwill
Intangible Assets
Other Assets
11,596,370
324,000
4,470,306
2,693,167
481,080
0
496,457
0
10,566,000
324,000
4,070,000
2,452,000
438,000
0
452,000
0
Total Assets
20,061,379
18,302,000
8,585,843
556,086
449,110
7,817,000
698,000
463,000
9,591,039
879,540
1,256,000
0
644,000
0
8,978,000
1,104,000
1,256,000
0
644,000
0
12,370,578
11,982,000
Preferred Stock
Common Stock
Retained Earnings
Treasury Stock
Capital Surplus
0
0
0
42,000
7,167,814
0
441,000
40,000
0
0
0
42,000
5,797,000
0
441,000
40,000
7,690,814
6,320,000
$4,576,982
$3,430,000
Liabilities
Current Liabilities
Accounts Payable
Long Term Debt
Other Liabilities
Minority Interest
Negative Goodwill
Total Liabilities
Net Tangible Assets

2/28/2009
45,015,000
34,017,000
% of sales
75.53%
3/3/2012
59,416,970
44,877,783
8.86%
>>
>>
14,539,187
10,998,000
>>
8,984,000
19.37%
0.10%
11,507,635
62,174
0
>>
>>
>>
255000
0
9239000
11,569,809
1,870,000
2,969,378
35,000
1,905,000
94,000
1,811,000
674,000
-30,000
54,000
3,023,378
74,888
2,948,490
1,077,307
-77,000
1,114,000
1,794,183
0
0
0
0
0
0
0
0
>>
>>
>>
>>
1,003,000
0
1,794,183
0
>>
$1,003,000
>>
>>
++
>>
>>
>>
1,794,183
3/3/2012
59,416,970
44,877,783
0
14539186.86
0
0
0
11,507,635
62,174
0
0
11,569,809
0
0
2,969,378
0
0
54,000
3,023,378
48,081
2,975,297
1,087,102
-77,000
0
1,811,195
0
0
0
0
0
0
0
0
1,811,195
0
0
>>
>>
>>
>>
>>
>>
>>
>>
++
>>
>>
>>
>>
>>
>>
>>
>>
1,811,195
28-Feb-09
498,000
11,000
1,868,000
3.67%
4.06%
2,183,269
90,000
2,415,227
>>
>>
>>
2,183,269
90,000
2,415,227
>>
>>
>>
4,753,000
1,062,000
11.04%
2.30%
6,559,373
1,367,831
>>
>>
8,192,000
395,000
4,174,000
2,203,000
495,000
0
367,000
0
21.25%
12,615,701
324,000
4,866,323
2,931,751
523,698
0
540,437
0
>>
>>
>>
>>
>>
>>
>>
8.19%
4.93%
0.88%
0.00%
0.91%
21,801,909
15,826,000
15.73%
6,559,373
1,367,831
0
12,615,701
324,000
4,866,323
2,931,751
523,698
0
540,437
0
0
21,801,909
0
0
0
9,346,449
357,025
435,637
0
10,139,111
564,693
1,256,000
0
644,000
0
0
12,603,804
0
0
0
0
0
42,000
8,692,118
0
441,000
40,000
9,346,449
556,086
435,637
>>
++
>>
8,435,000
1,126,000
1,109,000
0
513,000
0
10,338,172
879,540
1,256,000
0
644,000
0
++
>>
>>
>>
>>
11,183,000
13,117,711
0
0
0
41,000
4,714,000
0
205,000
-317,000
0
0
0
42,000
8,675,105
0
441,000
40,000
4,643,000
9,198,105
9,215,118
22,315,816
21,818,922
21,801,909
22,315,816
-513,907
21,801,909
21,818,922
-17,013
-199,061
-314,847
-6,590
-10,423
-26,808
-887
7,119,000
837,000
479,000
3%
.
>>
>>
>>
>>
++
>>
>>
$1,945,000
5.22%
16,110,093

Forecasted AFN =
5.46%
94.54%
36.54%
long term debt =
Additional long-term debt =
11.22%
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
++
>>
++
>>
>>
>>
>>
>>
>>
>>
>>
++
>>
>>
3/3/2012
59,416,970
44,877,783
>>
>>
14,539,187
3/3/2012
59,416,970
44,877,783
14,539,187
>>
11,507,635
62,174
0
>>
>>
>>
11,507,635
62,174
0
11,569,809
11,569,809
2,969,378
2,969,378
54,000
3,023,378
47,193
2,976,185
1,087,426
-77,000
>>
>>
++
>>
>>
>>
1,811,759
0
0
0
0
54000
3,023,378
47,164
2,976,214
1,087,437
-77,000
1,811,777
>>
>>
>>
>>
1,811,759
0
0
0
0
1,811,777
>>
1,811,759
2,183,269
90000
2,415,227
1,811,777
>>
>>
>>
2,183,269
90,000
2,415,227
6559373.284
1367831.396
>>
>>
6,559,373
1,367,831
12,615,701
324,000
4,866,323
2,931,751
523,698
0
540,437
0
>>
>>
>>
>>
>>
>>
>>
12,615,701
324,000
4,866,323
2,931,751
523,698
0
540,437
0
21,801,909
21,801,909
9,346,449
350,435
435,637
>>
++
>>
9,346,449
350,217
435,637
10,132,521
554,270
1,256,000
0
644,000
0
++
>>
>>
>>
>>
10,132,303
553,925
1,256,000
0
644,000
0
12,586,791
0
0
0
42,000
8,692,681
0
441,000
40,000
12,586,228
>>
>>
>>
>>
++
>>
>>
0
0
0
42,000
8,692,700
0
441,000
40,000
9,215,681
9,215,700
21,802,472
21,801,928
21,801,909
21,802,472
-563
21,801,909
21,801,928
-19
-218
-345
-7
-11
-29
-1
Income Statement
Period Ending
3/3/2012
2/26/2011
Total Revenue
Cost of Revenue
59,416,970
44,877,783
54,581,667
41,225,667
Gross Profit
14,539,187
13,356,000
Operating Expenses
11,507,635
10,571,153
62,174
0
57,114
0
11569809.04
10628267.7
2,969,378
2,727,732

Interest Expense
Income Before Tax
Income Tax Expense
Minority Interest
54,000
3,023,378
47,164
2,976,214
1,087,437
-77,000
54,000
2,781,732
74,888
2,706,844
989,015
-77,000
1,811,777
1,640,829
0
0
0
0
0
0
0
0
1,811,777
0
1,640,829
0
$1,811,777
$1,640,829
2,183,269
90,000
2,415,227
2,005,597
90,000
2,218,678

Non Recurring
Others
Extraordinary Items
Other Items
Net Income
Balance Sheet
Period Ending
Assets
Current Assets
Net Receivables
Inventory
6,559,373
1,367,831
6,025,577
1,256,518

Goodwill
Intangible Assets
Other Assets
12,615,701
324,000
4,866,323
2,931,751
523,698
0
540,437
11,596,370
324,000
4,470,306
2,693,167
481,080
0
496,457
0
Total Assets
21,801,909
20,061,379
9,346,449
350,217
435,637
8,585,843
556,086
449,110

Long Term Debt
Other Liabilities
Minority Interest
Negative Goodwill
10,132,303
553,925
1,256,000
0
644,000
0
9,591,039
879,540
1,256,000
0
644,000
0
Total Liabilities
12,586,228
12,370,578
Preferred Stock
Common Stock
Retained Earnings
Treasury Stock
Capital Surplus
0
0
0
42,000
8,692,700
0
441,000
40,000
0
0
0
42,000
7,167,814
0
441,000
40,000
9,215,700
7,690,814
$5,760,233
$4,516,554
Liabilities
Current Liabilities
Accounts Payable
Net Tangible Assets

2/27/2010
49,694,000
37,534,000
% of sales
75.53%
3/2/2013
64,249,691
48,527,949
8.13%
>>
>>
15,721,742
12,160,000
>>
9,873,000
19.37%
0.10%
12,443,616
67,231
0
>>
>>
>>
52000
0
9925000
12,510,848
2,235,000
3,210,894
54,000
2,289,000
94,000
2,195,000
802,000
-77,000
54,000
3,264,894
47,164
3,217,730
1,175,681
-77,000
1,317,000
1,965,049
0
0
0
0
0
0
0
0
>>
>>
>>
>>
1,317,000
0
1,965,049
0
>>
$1,317,000
>>
>>
++
>>
>>
>>
1,965,049
3/2/2013
64,249,691
48,527,949
0
15721741.8
0
0
0
12,443,616
67,231
0
0
12,510,848
0
0
3,210,894
0
0
54,000
3,264,894
12,275
3,252,619
1,188,429
-77,000
0
1,987,191
0
0
0
0
0
0
0
0
1,987,191
0
0
>>
>>
>>
>>
>>
>>
>>
>>
++
>>
>>
>>
>>
>>
>>
>>
>>
1,987,191
27-Feb-10
1,826,000
90,000
2,020,000
3.67%
4.06%
2,360,847
90,000
2,611,671
>>
>>
>>
2,360,847
90,000
2,611,671
>>
>>
>>
5,486,000
1,144,000
11.04%
2.30%
7,092,884
1,479,085
>>
>>
10,566,000
324,000
4,070,000
2,452,000
438,000
0
452,000
0
21.23%
13,634,487
324,000
5,262,129
3,170,206
566,293
0
584,394
0
>>
>>
>>
>>
>>
>>
>>
8.19%
4.93%
0.88%
0.00%
0.91%
23,541,510
18,302,000
15.73%
7,092,884
1,479,085
0
13,634,487
324,000
5,262,129
3,170,206
566,293
0
584,394
0
0
23,541,510
0
0
0
10,106,649
91,147
422,568
0
10,620,364
144,164
1,256,000
0
644,000
0
0
12,664,527
0
0
0
0
0
42,000
10,376,124
0
441,000
40,000
10,106,649
350,217
422,568
>>
++
>>
8,978,000
1,104,000
1,256,000
0
644,000
0
10,879,434
553,925
1,256,000
0
644,000
0
++
>>
>>
>>
>>
11,982,000
13,333,359
0
0
0
42,000
5,797,000
0
441,000
40,000
0
0
0
42,000
10,353,982
0
441,000
40,000
6,320,000
10,876,982
10,899,124
24,210,341
23,563,651
23,541,510
24,210,341
-668,831
23,541,510
23,563,651
-22,141
-259,070
-409,761
-8,576
-13,565
-34,889
-1,155
7,817,000
698,000
463,000
3%
.
>>
>>
>>
>>
++
>>
>>
$3,430,000
5.22%
15,784,479

Forecasted AFN =
3.51%
96.49%
36.54%
long term debt =
Additional long-term debt =
11.38%
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
++
>>
++
>>
>>
>>
>>
>>
>>
>>
>>
++
>>
>>
3/2/2013
64,249,691
48,527,949
>>
>>
15,721,742
3/2/2013
64,249,691
48,527,949
15,721,742
>>
12,443,616
67,231
0
>>
>>
>>
12,443,616
67,231
0
12,510,848
12,510,848
3,210,894
3,210,894
54,000
3,264,894
11,120
3,253,774
1,188,851
-77,000
>>
>>
++
>>
>>
>>
1,987,924
0
0
0
0
54000
3,264,894
11,082
3,253,813
1,188,865
-77,000
1,987,948
>>
>>
>>
>>
1,987,924
0
0
0
0
1,987,948
>>
1,987,924
2,360,847
90000
2,611,671
1,987,948
>>
>>
>>
2,360,847
90,000
2,611,671
7092884.499
1479084.919
>>
>>
7,092,884
1,479,085
13,634,487
324,000
5,262,129
3,170,206
566,293
0
584,394
0
>>
>>
>>
>>
>>
>>
>>
13,634,487
324,000
5,262,129
3,170,206
566,293
0
584,394
0
23,541,510
23,541,510
10,106,649
82,570
422,568
>>
++
>>
10,106,649
82,287
422,568
10,611,787
130,599
1,256,000
0
644,000
0
++
>>
>>
>>
>>
10,611,503
130,150
1,256,000
0
644,000
0
12,642,386
0
0
0
42,000
10,376,857
0
441,000
40,000
12,641,653
>>
>>
>>
>>
++
>>
>>
0
0
0
42,000
10,376,881
0
441,000
40,000
10,899,857
10,899,881
23,542,243
23,541,534
23,541,510
23,542,243
-733
23,541,510
23,541,534
-24
-284
-449
-9
-15
0.83%
96.59%
36.54%
-38
-1
11.39%
5.22%
15,767,499
Year
2008
2009
2010
Revenue
40,023,000
45,015,000
49,694,000
SUMMARY OUTPUT
Forecasted revenue 2011

Forecasted sales growth 2011
Multiple R
0.999825466
R Square
0.999650962
Adjusted R Square
0.999301923
Standard Error
127781.7149
Observations
3
ANOVA
df
Regression
Residual
Total
1
1
2
Coefficients
35,239,667
4,835,500
Intercept
X Variable 1
Year
2008
2009
2010
2011
SS
MS
4.67641E+13 4.67641E+13
16328166667 16328166667
4.67804E+13
Standard Error
195189.7937
90355.31713
t Stat
180.5405191
53.51649636
F
2864.015382
P-value
0.003526152
0.011894383
Revenue
40,023,000
45,015,000
49,694,000
54,583,890
SUMMARY OUTPUT

Multiple R
0.999930188
R Square
0.999860381
Adjusted R Square
0.999790572
Standard Error
90359.4187
Observations
4
ANOVA
df
Regression
Residual
Total
1
2
3
SS
1.16943E+14
16329649096
1.16959E+14
MS
1.16943E+14
8164824548
F
14322.72669
Coefficients
35,238,555
4,836,167
Intercept
X Variable 1
Year
2008
2009
2010
2011
2012
Standard Error
110667.2346
40409.96053
t Stat
318.4190453
119.6775948
P-value
9.86269E-06
6.98118E-05
Revenue
40,023,000
45,015,000
49,694,000
54,583,890
59,430,939
SUMMARY OUTPUT

Multiple R
0.999965012
R Square
0.999930025
Adjusted R Square
0.999906699
Standard Error
73898.58934
Observations
5
ANOVA
df
Regression
Residual
Total
Intercept
X Variable 1
1
3
4
Coefficients
35,233,935
4,838,477
SS
2.34109E+14
16383004520
2.34125E+14
MS
2.34109E+14
5461001507
Standard Error
77505.49437
23368.78582
t Stat
454.5991962
207.0487015
F
42869.16479
P-value
2.34735E-08
2.48437E-07
$ 54,581,667
9.84%
Significance F
0.011894383
Lower 95%
Upper 95% Lower 95.0% Upper 95.0%
32759545.19 37719788.1 32759545.2 37719788.1
3687426.842 5983573.16 3687426.84 5983573.16
$ 59,419,390
8.86%
Significance F
6.98118E-05
Lower 95%
34762392.52 35714717.9 34762392.5 35714717.9
4662296.853 5010036.91 4662296.85 5010036.91
$ 64,264,796
8.13%
Significance F
2.48437E-07
Lower 95%
34987278.37 35480592.5 34987278.4 35480592.5
4764106.853 4912846.67 4764106.85 4912846.67
Revenue
Year
1
40,023,000
2008
2
45,015,000
2009
3
49,694,000
2010
1.1143
Income Statement
Period Ending
3/2/2013
Total Revenue
Cost of Revenue
64,249,691
48,527,949
Gross Profit
15,721,742
Operating Expenses
Selling General and
Administrative
Non Recurring
Others
0
12,443,616
67,231
0
12,510,848
3,210,894
Income from Continuing
Operations
Total Other
Income/Expenses
Net
Earnings
Before Interest
And Taxes
Interest Expense
Income Before Tax
Income Tax Expense
Minority Interest
Net Income From
Continuing Ops
Extraordinary Items
Effect Of Accounting
Changes
Other Items
54,000
3,264,894
11,082
3,253,813
1,188,865
-77,000
1,987,948
0
0
0
0
Net Income
1,987,948
0
1,987,948
Balance Sheet
Period Ending
3/2/2013
Assets
Current Assets
Cash And Cash Equi
Net Receivables
Inventory
2,360,847
90,000
2,611,671
7,092,884
1,479,085
13,634,487

Goodwill
Intangible Assets
Other Assets
324,000
5,262,129
3,170,206
566,293
0
584,394
0
Total Assets
23,541,510
Liabilities
Current Liabilities
Accounts Payable
Short/Current Long Term
Debt
10,106,649
82,287
422,568

Long Term Debt
Other Liabilities
Minority Interest
Negative Goodwill
10,611,503
130,150
1,256,000
0
644,000
0
Total Liabilities
12,641,653
Preferred Stock
Common Stock
Retained Earnings
Treasury Stock
Capital Surplus
0
0
0
42,000
10,376,881
0
441,000
40,000
10,899,881
Net Tangible Assets
$7,163,357
EBIT
Tax Rate
NOPAT
3,264,894
36.54%
2,071,981
Operating Current Assets

Operating Current Liability
Net Operating Working Capital
Operating Fixed Assets
Total Operating Capital
13,544,487
10,611,503
2,932,984
9,907,022
12,840,006
Net Investment in Operating Capital
1,260,400
FCF
Average growth rate of FCF
Horizon Value
Adjusted FCF
811,581
7.00%
21,143,511
21,955,091
Operating Value
Non-operating Value
Total Corporation Value
Intrinsic MVA
Intrinsic Value of Equity

Total Numbers of Common Stocks Outstanding
Intrinsic Value of Stock Per Share
Actual Stock Price on Feb 28, 2010
Conclusion: Was the Stock Overvalued or Undervalued?
Scenario Analysis:
Average growth rate of FCF
Intrinsic Value of Equity
5%
8,181,461
421,899
19.39
$36.10
overvalued
MMM Analysis:
Industry Value/EBIT Multiple
Total Corporation Value based on Market Multiple Method
Intrinsic Value of Equity based on Market Multiple Method:
Average growth rate of FCF to achieve the MMM results:
3/3/2012
2/26/2011
2/27/2010
2/28/2009
3/1/2008
59,416,970
44,877,783
54,581,667
41,225,667
49,694,000
37,534,000
45,015,000
34,017,000
40,023,000
30,477,000
14,539,187
13,356,000
12,160,000
10,998,000
9,546,000
0
11,507,635
62,174
0
0
10,571,153
57,114
0
0
9,873,000
52,000
0
0
8,984,000
255,000
0
0
7,385,000
0
0
11,569,809
10,628,268
9925000
9239000
7385000
2,969,378
2,727,732
2,235,000
1,870,000
2,161,000
54,000
3,023,378
47,164
2,976,214
1,087,437
-77,000
54,000
2,781,732
74,888
2,706,844
989,015
-77,000
54,000
2,289,000
94,000
2,195,000
802,000
-77,000
35,000
1,905,000
94,000
1,811,000
674,000
-30,000
129,000
2,290,000
62,000
2,228,000
815,000
-3,000
1,811,777
1,640,829
1,317,000
1,114,000
1,407,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,811,777
0
1,640,829
0
1,317,000
0
1,003,000
0
1,407,000
0
1,811,777
1,640,829
$1,317,000
$1,003,000
$1,407,000
3/3/2012
2/26/2011
2/27/2010
2/28/2009
3/1/2008
2,183,269
90,000
2,415,227
6,559,373
1,367,831
2,005,597
90,000
2,218,678
6,025,577
1,256,518
1,826,000
90,000
2,020,000
5,486,000
1,144,000
498,000
11,000
1,868,000
4,753,000
1,062,000
1,438,000
64,000
549,000
4,708,000
583,000
12,615,701
11,596,370
10,566,000
8,192,000
7,342,000
324,000
4,866,323
2,931,751
523,698
0
540,437
0
324,000
4,470,306
2,693,167
481,080
0
496,457
0
324,000
4,070,000
2,452,000
438,000
0
452,000
0
395,000
4,174,000
2,203,000
495,000
0
367,000
0
605,000
3,306,000
1,088,000
97,000
0
320,000
0
21,801,909
20,061,379
18,302,000
15,826,000
12,758,000
9,346,449
350,217
435,637
8,585,843
556,086
449,110
7,817,000
698,000
463,000
7,119,000
837,000
479,000
6,049,000
189,000
531,000
10,132,303
553,925
1,256,000
0
644,000
0
9,591,039
879,540
1,256,000
0
644,000
0
8,978,000
1,104,000
1,256,000
0
644,000
0
8,435,000
1,126,000
1,109,000
0
513,000
0
6,769,000
627,000
838,000
0
40,000
0
12,586,228
12,370,578
11,982,000
11,183,000
8,274,000
0
0
0
42,000
8,692,700
0
441,000
40,000
0
0
0
42,000
7,167,814
0
441,000
40,000
0
0
0
42,000
5,797,000
0
441,000
40,000
0
0
0
41,000
4,714,000
0
205,000
-317,000
0
0
0
41,000
3,933,000
0
8,000
502,000
9,215,700
7,690,814
6,320,000
4,643,000
4,484,000
$5,760,233
$4,516,554
$3,430,000
$1,945,000
$3,299,000
3,023,378
36.54%
1,918,709
2,781,732
36.54%
1,765,355
2,289,000
36.54%
1,452,655
1,905,000
37.22%
1,196,016
2,290,000
36.58%
1,452,320
12,525,701
10,132,303
2,393,398
9,186,208
11,579,606
11,506,370
9,591,039
1,915,331
8,465,009
10,380,340
10,476,000
8,978,000
1,498,000
7,736,000
9,234,000
8,181,000
8,435,000
-254,000
7,634,000
7,380,000
7,278,000
6,769,000
509,000
5,416,000
5,925,000
1,199,266
1,146,340
1,854,000
1,455,000
719,443
619,014
-401,345
-258,984
719,443
619,014
$17,146,906
$90,000
$17,236,906
6,124,589
13,071,906
421,899
$30.98
$36.10
overvalued
total-debt
Analysis:
6%
10,351,186
421,899
24.53
$36.10
overvalued
8%
18,880,467
421,899
44.75
$36.10
undervalued
9%
29,216,839
421,899
69.25
$36.10
undervalued
nalysis:
8.07
$16,922,790
$12,757,790
6.79%
421,899
30.24
$36.10
overvalued
Retail (special line)
ROIC 08
ROIC 09
ROIC 10
ROIC 11
ROIC 12
ROIC 13
24.51%
16.21%
15.73%
17.01%
16.57%
16.14%
Economic Spread
8
9
10
11
12
WACC 08
WACC 09
WACC 10
WACC 11
WACC 12
WACC 13
'=ROIC-WACC
13.15%
5.81%
4.62%
5.79%
5.19% EVA=
Year
2008
2009
2010
11.36%
10.40%
11.11%
11.22%
11.38%
11.39%
EVA 08
EVA 09
EVA 10
EVA 11
EVA 12
NOPAT - [WACC (NOPAT = ROIC

(ROIC-WACC)x
ROIC
24.51%
16.21%
15.73%
WACC
11.36%
10.40%
11.11%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
779,183
428,475
427,022
601,121
601,084
MVA 08
MVA 09
MVA 10
MVA 11
MVA 12
12,514,898
7,050,305
8,910,554
Invested capital = total operating capital

30.00%
25.00%
20.00%
15.00%
ROIC
WACC
10.00%
5.00%
0.00%
2008
2009
2010
BBY
Major Ratios
COR/Sales
SGA/Sales
Cash/Sales
Net rec./Sales
NFA/Sales
Inv./Sales
AP & Accr./Sales
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2010 (Actual)
75.53%
19.87%
3.67%
4.06%
8.19%
11.04%
15.73%
2009(actual)
75.57%
19.96%
1.11%
4.15%
9.27%
10.56%
15.81%
2008(actual)
76.15%
18.45%
3.59%
1.37%
8.26%
11.76%
15.11%
HGG
HGG(2010-actual)
69.57%
24.83%
10.29%
2.40%
8.67%
13.13%
12.66%
2010 (Actual)
2009(actual)
2008(actual)
HGG(2010-actual)
BestBuy's Value as of Feb 28, 2010 @ 7.00%
Value of operations
Nonoperating aassets
Debt
Preferred stock
Equity (Market)
Equity (Book)
MVA
Sum
Sources of Value
Claims on Value
17,146,906
90,000
4,165,000
13,071,906
17,236,906
17,236,906
Billions
Market vs. Book

4,165,000
6,320,000
6,751,906
17,236,906
20
18
16
14
MVA
12
Equity (Book)
10
Equity (Market)
Preferred stock
Debt
Value of operations
Sources of Value Claims on Value Market vs. Book
Equity (Book)
Equity (Market)
Preferred stock
Value of operations
Date
3/1/2010
2/1/2010
1/4/2010
12/1/2009
11/2/2009
10/1/2009
9/1/2009
8/3/2009
7/1/2009
6/1/2009
5/1/2009
4/1/2009
3/2/2009
2/2/2009
1/2/2009
12/1/2008
11/3/2008
10/1/2008
9/2/2008
8/1/2008
7/1/2008
6/2/2008
5/1/2008
4/1/2008
3/3/2008
2/1/2008
1/2/2008
12/3/2007
11/1/2007
10/1/2007
9/4/2007
8/1/2007
7/20/2007
Adj Close S&P500

Adj Close HGG (X value) Km
1169.43
25.24
5.88%
1104.49
20.87
2.85%
1073.87
21.3
-3.70%
1115.1
22.03
1.78%
1095.63
19.35
5.74%
1036.19
16.49
-1.98%
1057.08
16.94
3.57%
1020.62
17.28
3.36%
987.48
18.35
7.41%
919.32
15.16
0.02%
919.14
16.55
5.31%
872.81
16.6
9.39%
797.87
14.15
8.54%
735.09
10.26
-10.99%
825.88
8.1
-8.57%
903.25
8.68
0.78%
896.24
5.96
-7.48%
968.75
5.48
-16.94%
1166.36
9.75
-9.08%
1282.83
10.04
1.22%
1267.38
10.01
-0.99%
1280
10
-8.60%
1400.38
10.98
1.07%
1385.59
10.27
4.75%
1322.7
11.25
-0.60%
1330.63
11.54
-3.48%
1378.55
12.21
-6.12%
1468.36
13.76
-0.86%
1481.14
14.05
-4.40%
1549.38
15.76
1.48%
1526.75
10.5
3.58%
1473.99
12.8
1.29%
1455.27
14.25
(Y value) Ks
20.94%
-2.02%
-3.31%
13.85%
17.34%
-2.66%
-1.97%
-5.83%
21.04%
-8.40%
-0.30%
17.31%
37.91%
26.67%
-6.68%
45.64%
8.76%
-43.79%
-2.89%
0.30%
0.10%
-8.93%
6.91%
-8.71%
-2.51%
-5.49%
-11.26%
-2.06%
-10.85%
50.10%
-17.97%
-10.18%
Regressio
Income statement
Period Ending
31-Mar-10
31-Mar-09
31-Mar-08
Total Revenue
1,534,253
1,396,678
1,256,666
Cost of Revenue
1,067,312
961,570
867,733
466,941
435,108
388,933
380,990
348,879
320,616
602
17,160
15,984
Gross Profit
Operating Expenses
Selling General and
Administrative
Non Recurring
Others
398150
365465
320616
68,791
69,643
68,317
-97
15
-21,842
68,694
69,658
46,475
5,154
7,103
10,706
Income Before Tax
63,540
62,555
35,769
Income Tax Expense
24,342
26,058
14,363
39,052
36,497
21,406
Extraordinary Items
Other Items
39,198
36,497
21,406
$39,198
$36,497
$21,406
31-Mar-10
31-Mar-09
31-Mar-08
157,837
21,496
1,869

Total Other Income/Expenses
Net
Earnings Before Interest And
Taxes
Interest Expense
Minority Interest
Net Income From Continuing
Ops
Net Income
Net Income Applicable To Common

Shares
Balance sheet
Period Ending
Assets
Current Assets
36,878
18,778
24,513
201,503
141,610
133,368
8,529
4,247
3,741
404,747
186,131
163,491
133,013
83,555
77,794
Goodwill
Intangible Assets
867
501
330
Net Receivables
Inventory
Other Assets
67,292
80,188
88,304
605,919
350,375
329,919
194,260
94,332
117,332
908
908
20,330
15,234
18,039
215,498
110,474
135,371
Long Term Debt
87,433
91,700
92,608
Other Liabilities
49,580
23,048
20,266
Minority Interest
Negative Goodwill
352,511
225,222
248,245
Preferred Stock
Common Stock
159,149
Total Assets
Liabilities
Current Liabilities
Accounts Payable
Total Liabilities
Retained Earnings
-300
-39,498
-75,995
Treasury Stock
Capital Surplus
254,770
165,524
-1,066
-876
-1,480
253,408
125,153
81,674
$253,408
$125,153
$81,674
Net Tangible Assets
SUMMARY OUTPUT
Multiple R
R Square
Adjusted R Square
Standard Error
Observations
0.429047081
0.184081398
0.155946274
0.174376877
31
ANOVA
df
Regression
Residual
Total
Intercept
SS
MS
1 0.198948 0.198948
29 0.881812 0.030407
30 1.080759
CoefficientsStandard Error t Stat

0.038366187 0.031529 1.216851
0.058796368 1.331546395 0.520566 2.557882

(^TNX) rate on Mar. 31, 2010:
Beta
RPm
Shares outstanding:
Stock price on Mar. 31, 2010:
Total market value of common equity
F
Significance F
6.5427612 0.01602
P-value Lower 95%

0.2334716 -0.02612
0.01602 0.266869
3.83%
1.3315
6.00%
11.82%
38,595 from 10K '10 fiscal year
25.24
974,136 in thousands

Year 2010
5.83%
1,061,569
8.24%
91.76%
38.31%
11.14%
Significance F
Upper 95%Lower 95.0%Upper 95.0%

0.10285 -0.026118 0.10285
2.396223 0.2668695 2.396223
Dividend Fundamentals
2008
2009
2010 Industry Average
3.42
2.41
3.12
Return on equity
8.28%
8.58%
8.65%
11.66%
Dividend Yield
1.11%
1.92%
1.36%
0.56%
Insider holdings
18%
14.62%
Institutional holdings
71%
50.68%
Earnings per share
Date
2/1/2010
1/4/2010
12/1/2009
11/2/2009
10/1/2009
9/1/2009
8/3/2009
7/1/2009
6/1/2009
5/1/2009
4/1/2009
3/2/2009
2/2/2009
1/2/2009
12/1/2008
11/3/2008
10/1/2008
9/2/2008
8/1/2008
7/1/2008
6/2/2008
5/1/2008
4/1/2008
3/3/2008
2/1/2008
1/2/2008
12/3/2007
11/1/2007
10/1/2007
9/4/2007
8/1/2007
7/2/2007
6/1/2007
5/1/2007
4/2/2007
3/1/2007
2/1/2007
1/3/2007
12/1/2006
11/1/2006
10/2/2006
9/1/2006
8/1/2006
7/3/2006
6/1/2006
5/1/2006
4/3/2006
3/1/2006
2/1/2006
1/3/2006
12/1/2005
11/1/2005
10/3/2005
9/1/2005
BestBuy
36.1
36.25
39.03
42.22
37.63
36.84
35.63
36.7
32.75
34.33
37.53
37
28.09
27.31
27.26
20.08
26.07
36.22
43.24
38.36
38.12
44.95
41.41
39.79
41.28
46.77
50.39
48.86
46.44
43.93
41.95
42.57
44.46
46
44.44
46.32
44.19
47.91
46.76
52.15
52.42
50.81
44.51
42.94
51.93
50.11
53.57
52.81
50.85
47.83
41.05
45.46
41.71
41.03
BestBuy
60
50
40
30
20
10
0
2/28/2005
2/28/2006
2/28/2007
2/29/2008
8/1/2005
7/1/2005
6/1/2005
5/2/2005
4/1/2005
3/1/2005
2/28/2005
44.84
48.04
42.99
34.08
31.52
33.74
33.75
estBuy
BestBuy
2/29/2008
2/28/2009
EXECUTIVE SUGGESTIONS
1. Best Buy co, Inc. has maintained relatively low net receivables in
comparison to total assets until recent years where those assets have
jumped from 4% in 2007 to 11% in 2010. Being vigilant in recovering these
assets into more liquid forms of cash flow would ensure a higher equity
1 value.
The companys current policy and direction is pushing its products and
services to the international markets holding just under 1,200 stores in
domestic operations and roughly 2,850 stores in its international operations.
With a majority of investments being placed internationally focus should not
be lost on its domestic operations where about 6.7% of ROIC has been
placed towards improvements of domestic stores and opening of new retail
2 locations.
The company recognizes the following as direct competitors Our primary
competitors are discount chains, consumer electronics retailers including
vendors who offer their products direct to the consumer, wholesale clubs,
home-improvement superstores and Web-based alternatives. Recognizing
such a broad market of retail industries, Best Buy shows its understanding
that they have no primary direct competitors. As such, it is recommended
that the company further its separation from these markets creating its own
3 unique niche that would be difficult to be followed.
Geek Squad services which are currently extended to most Best Buy
domestic locations and some stores internationally, need to be increased to
much higher margin as the promotion of warranty income is pure initial profit
and variably less cost as time progresses. With each quality product that
leaves the companys doors having a warranty provides a customer service
and increases net profit from that sale. This also creates a need to return to
the store later on when the item has broken/needs service. Drawing
4 customers back to stores ultimately increases cash flows.
Continue researching effective ways to be leaders in LEED design and
environmental efficiency. Last year Best buy lowered its domestic energy
consumption by 8% while increasing their total average square footage by
4.8% from remodeling and new store opening. Lower energy consumption,
5 lessens overall operating cost and indirectly increases equity value.
In 2008 Best Buy acquired Napster for $121 million seeing potential for
utilizing Napsters electronics/internet medium and Best Buys reach to the
public. More research and development should be placed here to help
increase membership and sales to the Napster subsidiary. Utilizing a
bundling method where items sold at best buy would automatically be
included with a Napster subscription and free downloads to encourage faster
sign-ups. Increasing Napsters equity value as well as the Best Buy
6 Corporation.
Strengths
Weakness
Computer
Maintenance and
Service (Geek
Squad)
Increase in foreign
markets, also
Increase in foreign
increases variability market presence
High customer
service standards
High turnover of
employees
No direct
competitors,
competes with the
retail electronics
Strong Market Hold market as a whole
Opportunities
Exclusive rights to
products sold in
industry
Purchase of
Napster
Absence of a target Commoditizationconsumer

use of social media
Threats
Local small
electronic stores
Large merchants
eg. Wal-mart/ Costco

Group5 BestBuy

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Group5 BestBuy

Hochgeladen von

Copyright:

Verfügbare Formate

COMPANY:

BEST BUY (BBY)

Firm Cost of Equity (Ks)

Firm Cost of Equity (Ks)

Standard Error t Stat

Ks = Krf + Beta * RPm =

Stock price on Feb. 28, 2010:

Krf: 10-Year treasury note

Moving Averages (Ks) vs Actual (Ks)

Moving Averages (Km) vs Actual (Km)

s (Ks) vs Actual (Ks)

Moving Averages (KS)

(Km) vs Actual (Km)

Fama-French Three Factor Model

11.25% (kRF + (kM - kRF)bi + (kSMB)ci + (kHML)di + a)

Income from Continuing Operations

Net Income From Continuing Ops

Selling General and Administrative

Operating Income or Loss

Total Current Assets

Total Stockholder Equity

Kd =Interest expense / (Long term debt + short-term debt payable) =

Net Tangible Assets

Total long-term capital = Market value of equity + Long term debt =

Average revenue growth rate =

Forecasted total assets =

Additional interest expense =

Income from Continuing Operations

Net Income From Continuing Ops

Selling General and Administrative

Operating Income or Loss

Total Current Assets

Total Stockholder Equity

Net Tangible Assets

Kd =Interest expense / (Long term debt + short-term debt payable) =

Average revenue growth rate =

Forecasted total assets =

Additional interest expense =

Income from Continuing Operations

Net Income From Continuing Ops

Selling General and Administrative

Operating Income or Loss

Total Current Assets

Total Current Liabilities

Total Stockholder Equity

Net Tangible Assets

Kd =Interest expense / (Long term debt + short-term debt payable) =

Average revenue growth rate =

Forecasted total assets =

Additional interest expense =

Forecasted revenue 2011

Forecasted revenue 2012

Forecasted revenue 2013

Total Operating Expenses

Operating Income or Loss

Net Income Applicable To Common Shares

Long Term Investments

Total Current Liabilities

Total Stockholder Equity

Net Tangible Assets

Operating Current Assets

Net Investment in Operating Capital

Intrinsic Value of Equity