Summary
Bed Bath & Beyond will keep struggling, but the stock offers an attractive investment opportunity based on its cheap valuation.
The company has low net debt and a strong ability to generate cash despite the headwinds it is facing.
Bed Bath & Beyond now offers sufficient downside protection with a dividend yield around 5%. The stock has a 60% upside which is likely to be realized in two years.
In a previous analysis over a year ago, we defended the view that Bed Bath and Beyond (BBBY) was a suitable candidate for value investing; however, we added that it would be best to remain on the sidelines until the dividend yield hit 5%. A year has passed since we published our analysis and the dividend yield is close to 5% now, due to the sharp decline in BBBY stock price. It is now the time to pull the trigger and make an investment in the struggling retailer.
