Positive write-up in this week's Barron's:
"One of the country's most successful retailers is on the bargain counter.
Bed Bath & Beyond has generated 16% annual growth in earnings per share over the past 10 years. But its shares, at $59, trade for less than 12 times projected profit for its fiscal year that ends in February 2014. The stock (ticker: BBBY) trades at a discount to other top retailers', including Costco Wholesale (COST) and Target (TGT), neither of which has such a good profit history.
The shares could trade into the $70s in the next year, simply based on projected earnings gains and a higher price/earnings multiple. The insular company could attract interest from private-equity investors or even Berkshire Hathaway (BRK.A) if Bed Bath & Beyond's co-founders, Leonard Feinstein, 75, and Warren Eisenberg, 82, decide to sell. However, there is no indication that the company is looking to sell.
A BUYER MIGHT PAY $85 a share—roughly 10 times this fiscal year's projected earnings before interest, taxes, depreciation, and amortization (Ebitda)—consistent with prices paid for other quality companies, versus Bed Bath & Beyond's current modest valuation of 6.5 times. The company's $13 billion market value makes it large, but digestible. "This is a high-quality, cash-rich company that could see improving margins this year, particularly in the back half," says Laura Champine, an analyst at Canaccord Genuity who carries a $74 price target on the stock. Bed Bath & Beyond has commanded an average of 15 times forward earnings in the past seven years."
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