Bed Bath & Beyond, Inc. — financial distress indicators
Financial-health summary
Bed Bath & Beyond, Inc.'s reported numbers place it in the 'Very weak' financial-health band (distress score 78/100). The main indicators are market-implied default probability >20%, losses in each of the last 3 years and operations consume cash. Independently, the Ohlson accounting model puts its 1-year failure probability at 81% and the market-implied (Merton) default probability is 71.3%. In its favour: cash on hand covers all debt (net-cash balance sheet).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Merton distance-to-default -0.56 σ → PD 71%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
Price is -84% from its 52-week high.
Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.
O-score 1.45 → model probability 81%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Current ratio is 0.76.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
Revenue changed -25% year over year.
Falling sales reduce cash available for debt service.
Share count up +28% in a year.
Large issuance usually funds operating losses rather than growth.
Revenue declined every year for three years.
Structural, not cyclical, decline.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Cash on hand covers all debt (net-cash balance sheet).
📰 Recent news scan
- Three Important Developments in Section 16 Litigation - Hunton Andrews Kurth LLPGoogle News · 2026-07-28
- Second Circuit Upholds the Validity of Contractual ‘Blockers’ and Holds They Are Not a ‘Scheme to Evade’ Reporting Requirements - Akin Gump Strauss Hauer & Feld LLPGoogle News · 2026-07-15
- Wedbush Says Bed Bath & Beyond Is Trading at a Discount. BBBY Stock Is Soaring. - Barchart.comGoogle News · 2026-06-24
- Bed Bath and Beyond to acquire Fathom Holdings in stock deal - HousingWireGoogle News · 2026-06-17
- BBBY Stock Has Rallied 32% Over The Past Month — It Is Now Buying Fathom To Build A Homeownership Super App - StocktwitsGoogle News · 2026-06-17
- BBBY Stock Alert: Why Bed Bath & Beyond Is Rising After a Social Media Post - Yahoo FinanceGoogle News · 2026-05-20
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Bed Bath & Beyond, Inc.'s financial-health indicators show?
As of 2026-10-23, Bed Bath & Beyond, Inc.'s public financial data places it in the 'Very weak' band with a distress score of 78/100, driven by market-implied default probability >20%, losses in each of the last 3 years and operations consume cash. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Bed Bath & Beyond, Inc.'s financial distress score?
78/100 ('Very weak'). Ohlson O-score 1.45 (model 1-year failure probability 81%). Merton distance-to-default -0.56 σ (model default probability 71.3%).
What works in Bed Bath & Beyond, Inc.'s favour?
Cash on hand covers all debt (net-cash balance sheet).
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Unclassified companies with distress indicators
- ADSE (ADSE)Very weak 100/100
- AIIO (AIIO)Very weak 100/100
- AKAN (AKAN)Very weak 100/100
- ATCX (ATCX)Very weak 100/100
- BGI (BGI)Very weak 100/100
- BRNX (BRNX)Very weak 100/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.