Bed Bath & Beyond (NASDAQ:BBBY) has hit some bumps in the road and its stock has declined mightily in 2014. Its recent first-quarter earnings did not help its stock price as they disappointed Wall Street and pulled Bed Bath & Beyond's shares down even further . As a result, Bed Bath & Beyond's stock price has declined by close to 26% in 2014.

BBBY data by YCharts

Bed Bath & Beyond's decline sharply contrasts with the appreciation of one of its competitors but less so with the depreciation of another. Williams-Sonoma (NYSE:WSM) has appreciated substantially in 2014, while Pier 1 Imports (NYSE:PIR) has depreciated even more than Bed Bath & Beyond. These companies' diverging stock prices have led to some interesting disparities in valuation.

Bed Bath & Beyond has been opportunistic
Bed Bath & Beyond has responded aggressively to the significant decrease in its share price and purchased over 4 million shares in 2014's first quarter alone for about $273 million . The current share buyback program still has $861 million remaining, but Bed Bath & Beyond has augmented its capital return program even further by instituting a new $2 billion share buyback program. The new $2 billion share repurchase plan will begin once the company uses up the $861 million remaining on the previous plan .

Bed Bath & Beyond has proven that it rewards its shareholders by returning capital via share buybacks. The company has returned close to $7 billion to its shareholders through share buybacks since 2004. Share repurchases, however, can be unwise if a company's stock is overvalued and the company overpays for its shares. That said, Bed Bath & Beyond is currently trading at a discount and offers a compelling bargain for investors who are looking for value.

Bed Bath & Beyond is on sale



Forward P/E

5-yr. PEG



Bed Bath & Beyond












Pier 1 Imports






Data Source: Yahoo! Finance & Morningstar

Bed Bath & Beyond is the consensus bargain versus its competitors Williams-Sonoma and Pier 1. The only valuation ratio on which Bed Bath & Beyond does not come out on top is the five-year PEG. Still, the five-year PEG considers analysts' estimates for companies' earnings over the next five years and is not always reliable. The other valuation ratios reflect a company's current or past valuation save for the forward P/E, which looks out a year ahead and considers analysts' estimates for earnings over that time-frame.

Bed Bath & Beyond trades at a discount to the S&P 500's P/E of about 19 with a P/E of 12.4, and looks attractively valued looking out a year with a forward P/E of 11.1. Pier 1 is not far behind, however, with a forward P/E of 11.7. Bed Bath & Beyond's five-year PEG looks slightly overvalued at 1.4 but, as previously mentioned, the five-year PEG is not always the best indicator of a company's current valuation.

Bed Bath & Beyond's P/B ratio of 3 is about in line with its overall industry's P/B of 2.7. The company looks most attractive on a cash flow basis, however, with a P/CF multiple of 9.6, which is below the P/CF ratios of its overall industry and the S&P 500. The industry has a P/CF multiple of 21.2 while the S&P 500 trades at a P/CF ratio of 11.2 .

Foolish takeaway
Capital return programs and a low valuation give current investors good reasons to hold on to Bed Bath & Beyond's shares and new investors good reasons to initiate positions in Bed Bath & Beyond. The company is being opportunistic on the decline in its share price and investors should benefit over the long term. Moreover, as explored in my previous article, the low valuation could lead to a buyout by the company's management, private equity, or another acquirer -- which would lead to substantial gains for Bed Bath & Beyond's shareholders.