Why Best Buy is a Great Company
Market Valuation: $19 Billion
Ironbound Buy-Side Valuation: $15 Billion
Ironbound Assessment: Minnesota based Best Buy Co., Inc., founded in 1966, is an American multinational consumer electronic retail chain. Over the last 5 years the company has delivered over 10% return-on-assets, and over the last 10 years averaged 11% operating income as a percentage of assets. As a result, our upside valuation is on the higher end at $25 Billion, equivalent to 10-times the average operating income reported over the most recent three years. We like Best Buy because it reports a mission driven triple-bottom-linebusiness model in their 10K SEC filings. In addition, the company boasts a clear north-star purpose: to enrich lives through technology. Moreover, the company is determined to lead with a positive impact on society and the environment. In 2022, Best Buy reported a 2030 goal to reduce carbon emissions by 75% and become carbon neutral by 2040. Their environmental initiatives also include a 25% reduction in water consumption by 2025 with waste reductions from single-use-plastics as well as a transition to more sustainable alternatives. As part of their long-term growth strategy, Best Buy has been making inroads into health technology to expand their health and fitness related products and services. These stakeholder growth strategies should help revenues double to $100 Billion over the coming decade.
165 Years of Macy’s Success
Image: Macy's NYC Flagship Store
Market Valuation: $6 Billion
Ironbound Buy-Side Valuation: $10 Billion
Ironbound Assessment: Manhattan NY based Macy’s Inc., founded in 1858, is an American omnichannel higher-end retailer with almost 800 locations. Our upside valuation is $17 Billion, equivalent to either 4-times the operating income or the fiscal 2021 value of all assets. We like Macy’s and believe the secret behind the company’s 165 years of success is rooted in their team culture, which levels-up colleagues with education and career growth. Furthermore, there is a strong emphasis in the 10K SEC filings on workplace values of acceptance, respect, integrity, and giving back. Looking ahead, Macy’s is making a major post-Covid Polaris growth strategy – designed to better attract Millennials. The Polaris strategy involves modernizing existing technologies to combine the instore and digital experiences with more branded products that better appeal to the new and younger demographic.
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