Huge Potential Upside for Barnes & Noble, Inc. (BKS)

Barnes & Noble Should be Worth $35 Per Share

According to the “sum of all parts” valuation, Barnes & Noble might be worth at least $2.1 billion, or $35 per share. Previously, Barnes & Noble had put itself up for sale two years ago, and only John Malone’s Liberty Media was interested. Liberty Media invested $204 million in the company’s preferred stock that paid a 7.75% dividend and was convertible into 12 million shares at $17 apiece.

At the current trading price of $15 per share, the total market cap of Barnes & Noble is around $900 million and the total enterprise value is about $770 million. It seems to be quite cheap compared to the “sum of all parts” valuation. The market is valuing Barnes & Noble at 4.12x EV/EBITDA. Books-A-Million is trading at $2.30 per share, with a total market cap of only $35.85 million. It is valued a bit cheaper, at 3.82x EV/EBITDA.

Foolish Bottom Line

Barnes & Noble could be an interesting opportunistic stock for patient investors. If B&N Retail received a buyout offer of $485 million, the value of Barnes & Noble’s shares would increase dramatically towards $35 per share.

The article Huge Potential Upside for Barnes & Noble originally appeared on Fool.com and is written by Anh HOANG.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.