Best Dividend Stocks. Analyze the stocks with the best dividend, while also showing decent profitability and health.


BEST BUY CO INC

New York Stock Exchange, Inc. / Consumer Discretionary / Specialty Retail

Fundamental Rating

6

BBY gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 125 industry peers in the Specialty Retail industry. BBY has an excellent profitability rating, but there are some minor concerns on its financial health. BBY is not valued too expensively and it also shows a decent growth rate. Finally BBY also has an excellent dividend rating. This makes BBY very considerable for dividend investing!



7

1. Profitability

1.1 Basic Checks

BBY had positive earnings in the past year.
In the past year BBY had a positive cash flow from operations.
In the past 5 years BBY has always been profitable.
In the past 5 years BBY always reported a positive cash flow from operatings.

1.2 Ratios

BBY has a Return On Assets of 8.29%. This is in the better half of the industry: BBY outperforms 77.60% of its industry peers.
The Return On Equity of BBY (40.65%) is better than 90.40% of its industry peers.
BBY's Return On Invested Capital of 19.06% is amongst the best of the industry. BBY outperforms 88.80% of its industry peers.
The Average Return On Invested Capital over the past 3 years for BBY is significantly above the industry average of 13.93%.
The 3 year average ROIC (25.19%) for BBY is well above the current ROIC(19.06%). The reason for the recent decline needs to be investigated.
Industry RankSector Rank
ROA 8.29%
ROE 40.65%
ROIC 19.06%
ROA(3y)10.43%
ROA(5y)10.12%
ROE(3y)57.56%
ROE(5y)51.23%
ROIC(3y)25.19%
ROIC(5y)24.01%

1.3 Margins

BBY's Profit Margin of 2.86% is fine compared to the rest of the industry. BBY outperforms 64.00% of its industry peers.
In the last couple of years the Profit Margin of BBY has declined.
BBY's Operating Margin of 3.97% is in line compared to the rest of the industry. BBY outperforms 59.20% of its industry peers.
BBY's Operating Margin has declined in the last couple of years.
BBY has a Gross Margin of 22.10%. This is in the lower half of the industry: BBY underperforms 78.40% of its industry peers.
In the last couple of years the Gross Margin of BBY has remained more or less at the same level.
Industry RankSector Rank
OM 3.97%
PM (TTM) 2.86%
GM 22.1%
OM growth 3Y-10.12%
OM growth 5Y-2.87%
PM growth 3Y-9.11%
PM growth 5Y-3.51%
GM growth 3Y-0.48%
GM growth 5Y-0.99%

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5

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so BBY is creating value.
BBY has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, BBY has less shares outstanding
Compared to 1 year ago, BBY has a worse debt to assets ratio.

2.2 Solvency

BBY has an Altman-Z score of 4.34. This indicates that BBY is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 4.34, BBY belongs to the best of the industry, outperforming 83.20% of the companies in the same industry.
BBY has a debt to FCF ratio of 1.73. This is a very positive value and a sign of high solvency as it would only need 1.73 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 1.73, BBY is doing good in the industry, outperforming 74.40% of the companies in the same industry.
A Debt/Equity ratio of 0.38 indicates that BBY is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.38, BBY is in line with its industry, outperforming 53.60% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.38
Debt/FCF 1.73
Altman-Z 4.34
ROIC/WACC2.07
WACC9.23%

2.3 Liquidity

A Current Ratio of 1.00 indicates that BBY may have some problems paying its short term obligations.
The Current ratio of BBY (1.00) is worse than 79.20% of its industry peers.
BBY has a Quick Ratio of 1.00. This is a bad value and indicates that BBY is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.37, BBY is doing worse than 67.20% of the companies in the same industry.
Industry RankSector Rank
Current Ratio 1
Quick Ratio 0.37

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4

3. Growth

3.1 Past

The earnings per share for BBY have decreased strongly by -10.14% in the last year.
BBY shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 3.47% yearly.
Looking at the last year, BBY shows a decrease in Revenue. The Revenue has decreased by -6.15% in the last year.
BBY shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 0.27% yearly.
EPS 1Y (TTM)-10.14%
EPS 3Y-6.95%
EPS 5Y3.47%
EPS growth Q2Q4.21%
Revenue 1Y (TTM)-6.15%
Revenue growth 3Y-2.76%
Revenue growth 5Y0.27%
Revenue growth Q2Q-0.6%

3.2 Future

The Earnings Per Share is expected to grow by 12.98% on average over the next years. This is quite good.
The Revenue is expected to grow by 1.24% on average over the next years.
EPS Next Y-4.44%
EPS Next 2Y3.24%
EPS Next 3Y6.77%
EPS Next 5Y12.98%
Revenue Next Year-3.1%
Revenue Next 2Y-0.55%
Revenue Next 3Y0.56%
Revenue Next 5Y1.24%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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6

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 11.58, which indicates a very decent valuation of BBY.
Compared to the rest of the industry, the Price/Earnings ratio of BBY indicates a rather cheap valuation: BBY is cheaper than 80.80% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of BBY to the average of the S&P500 Index (28.67), we can say BBY is valued rather cheaply.
The Price/Forward Earnings ratio is 12.12, which indicates a correct valuation of BBY.
Based on the Price/Forward Earnings ratio, BBY is valued a bit cheaper than the industry average as 78.40% of the companies are valued more expensively.
BBY is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 20.15, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 11.58
Fwd PE 12.12

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, BBY is valued cheaper than 80.80% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, BBY is valued a bit cheaper than the industry average as 62.40% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 23.58
EV/EBITDA 5.9

4.3 Compensation for Growth

BBY has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)3.34
EPS Next 2Y3.24%
EPS Next 3Y6.77%

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7

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 5.11%, BBY is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 3.25, BBY pays a better dividend. On top of this BBY pays more dividend than 96.00% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.32, BBY pays a better dividend.
Industry RankSector Rank
Dividend Yield 5.11%

5.2 History

The dividend of BBY is nicely growing with an annual growth rate of 15.34%!
BBY has paid a dividend for at least 10 years, which is a reliable track record.
As BBY did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)15.34%
Div Incr Years6
Div Non Decr Years6

5.3 Sustainability

64.54% of the earnings are spent on dividend by BBY. This is not a sustainable payout ratio.
The dividend of BBY is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP64.54%
EPS Next 2Y3.24%
EPS Next 3Y6.77%

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