Summary
- I compare and contrast Wayfair and Bed Bath & Beyond showing just how cheap Bed Bath is in comparison.
- However, I note that Bed Bath's problem started a long time ago, way before COVID-19.
- If Bed Bath succeeds online, this stock would rapidly re-price higher.
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Investment Thesis
Bed Bath & Beyond (BBBY) trades in the bargain basement. There are plenty of reasons that justify this valuation, such as its continuous decline in comp sales.
However, with the correct team, CEO Mark Tritton could pivot this furniture retailer to be relevant online as well as offline and stabilize its top line.
I show that there is a significant discrepancy between Wayfair's (W) valuation and Bed Bath's.
Ultimately, investors would do very well to watch this stock, and any insights into a successful online pivot during the upcoming earnings call in July, and shareholders may be rewarded here.
(Source)
The Market Looks For Direction
One moment the market is doom and gloomy, the next euphoric, and then repeat. Since late February, the market has been swinging wildly, enough to warrant another look at Bed Bath. Having recently looked over Wayfair, I note that its recent earnings call discussed how sales have been up 90% year-over-year since its quarter ended (March 31) through to very early May.
Having said that, as I noted in that article, Wayfair's revenue growth rates have been steadily decelerating:
(Source)
So I decided to take a renewed look at Bed Bath, particularly given that it trades at such a large and chronic discount to Wayfair. Are there reasons for this disconnect? Between boring, brick and mortar, furniture sales, and cool, online, furniture sales? And if there are no reasons for this disconnect, will the disconnect reverse?
Many Questions Remain At Bed Bath
Investors have long ago braced themselves for the horrific Q2 2020 report. If there was ever a chance to go full throttle and do a large water bath accounting, this will be an opportunity like no other.
