Bed Bath & Beyond (NASDAQ:BBBY) disappointed Wall Street with its first-quarter 2014 earnings and its stock price declined by almost 8% as a result . Bed Bath & Beyond had already declined by close to 30% in 2014.

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Bed Bath & Beyond missed both the consensus earnings and revenue estimates of Wall Street. The company's earnings per share for the first quarter of 2014 came in at $0.93, while Wall Street had expected $0.94. Moreover, Bed Bath & Beyond's revenue in the quarter came in at $2.66 billion, but Wall Street had expected $2.69 billion.

Now that Bed Bath & Beyond's stock has declined precipitously in 2014, how does its valuation compare to those of some of its rivals such as Williams-Sonoma (NYSE:WSM) and Pier 1 Imports (NYSE:PIR)? More importantly, has Bed Bath & Beyond declined enough to offer substantial value to investors?

The first quarter was not that bad
If they dig deeper into Bed Bath & Beyond's first-quarter results, investors will find that Bed Bath & Beyond's sales actually increased 1.7% overall and 0.4% on a comparable basis. Bed Bath & Beyond also repurchased a significant amount of its shares in the first quarter, about 4.2 million shares at a value of about $273 million .

Bed Bath & Beyond returns a significant amount of capital to its shareholders through stock buybacks as the recent quarter shows, but the company also has approximately $861 million remaining in its share repurchase program. Therefore, the company can be especially opportunistic with the recent declines in its stock and reward long-term shareholders who held onto the stock through the recent declines. The stock's valuation also makes the share repurchase program especially important now.

Ripe for repurchases and maybe a buyout



Forward P/E

5-yr. PEG



Bed Bath & Beyond












Pier 1 Imports






Source: Yahoo! Finance & Morningstar

Versus Williams-Sonoma and Pier 1 Imports, Bed Bath & Beyond looks the most attractively valued on the valuation metrics explored here, save the five-year PEG. The S&P 500 trades at a P/E of 18, so Bed Bath & Beyond trades at a discount to the market with a P/E of 12 and Pier 1 is not far behind with a P/E of about 15. Bed Bath & Beyond also looks cheap on a forward earnings basis with a forward P/E of about 11, and so does Pier 1 with a forward P/E of approximately 12.

Pier 1 comes out on top considering analysts' estimated five-year PEG of 0.85, compared to Bed Bath & Beyond's 1.36. Bed Bath & Beyond regains its luster on a P/B and P/CF basis, however. Its P/B ratio of 3 is on par with that of the market, while its P/CF ratio is a slight discount to the S&P 500's current P/CF multiple of 11.

Bed Bath & Beyond's low valuation means that the company gets the most "bang for its buck" when it initiates share repurchases through its capital return program. As a result, shareholders who maintain their stakes will get larger shares of the company and perhaps will benefit even more from a potential buyout of the company by management, private equity, or another entity.

Bed Bath & Beyond carries no long-term debt on its balance sheet, so it is particularly attractive to investors for a leveraged buyout; in combination with its current valuation, a buyout is becoming ever more likely.

Foolish takeaway
Bed Bath & Beyond is not doing as bad as the recent declines in its stock suggest. Its first quarter was not that bad and it just missed Wall Street's expectations. Nonetheless, its valuation is now at a level that appeals to not only investors who are looking for value but also investors who are looking to buy the company outright. The company's lack of debt and low valuation should benefit investors in Bed Bath & Beyond going forward.

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Andrew Sebastian has the following options: long November 2014 $60 calls on Bed Bath & Beyond. The Motley Fool recommends Bed Bath & Beyond and Williams-Sonoma. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.