Best Buy Co., Inc. (BBY), Wal-Mart Stores, Inc. (WMT): Is This Top Retail Performer Cheap Relative to Its Peers?

Moreover, by looking at annual sales we can create an idea of their market capitalization relative to the pure size of their business. Thus, if a company is cheap relative to sales, and operating cash flow, sometimes only minor changes are needed to produce a larger profit, indicating a higher level of value.

Clearly, beyond a price/earnings comparison, Best Buy Co., Inc. (NYSE:BBY) is significantly cheaper than both Wal-Mart Stores, Inc. (NYSE:WMT) and Amazon.com, Inc. (NASDAQ:AMZN) relative to sales and operating cash-flow. This suggests – based on last 12 months – that Best Buy does in fact have significant upside relative to the industry itself.

Final thoughts
Now, Best Buy Co., Inc. (NYSE:BBY) is not a clear-cut value stock with a likelihood to double over the next year. Instead, Best Buy is a project, and if the new CEO continues to execute his plan, and turn more of the company’s operating cash flow into bottom line profits, then Best Buy could trade significantly higher.

Hence, Best Buy is still cheap, presenting a much deeper discount to sales and operating cash-flow, meaning a $50 target might be conservative.

The article Is This Top Retail Performer Cheap Relative to Its Peers? originally appeared on Fool.com.

Brian Nichols has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. 

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