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

Taking everything into account, BBY scores 6 out of 10 in our fundamental rating. BBY was compared to 125 industry peers in the Specialty Retail industry. BBY scores excellent on profitability, but there are some minor concerns on its financial health. BBY has a decent growth rate and is not valued too expensively. 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.
BBY had a positive operating cash flow in the past year.
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

Looking at the Return On Assets, with a value of 8.29%, BBY is in the better half of the industry, outperforming 77.60% of the companies in the same industry.
BBY's Return On Equity of 40.65% is amongst the best of the industry. BBY outperforms 90.40% of its industry peers.
BBY has a better Return On Invested Capital (19.06%) than 88.80% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital 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

Looking at the Profit Margin, with a value of 2.86%, BBY is in the better half of the industry, outperforming 64.00% of the companies in the same industry.
In the last couple of years the Profit Margin of BBY has declined.
Looking at the Operating Margin, with a value of 3.97%, BBY is in line with its industry, outperforming 59.20% of the companies in the same industry.
BBY's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 22.10%, BBY is doing worse than 77.60% of the companies in the same industry.
BBY's Gross Margin has been stable in the last couple of years.
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

BBY has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, BBY has less shares outstanding
The number of shares outstanding for BBY has been reduced compared to 5 years ago.
Compared to 1 year ago, BBY has a worse debt to assets ratio.

2.2 Solvency

An Altman-Z score of 4.33 indicates that BBY is not in any danger for bankruptcy at the moment.
BBY has a Altman-Z score of 4.33. This is amongst the best in the industry. BBY outperforms 83.20% of its industry peers.
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.
BBY has a Debt/Equity ratio of 0.38. This is a healthy value indicating a solid balance between debt and equity.
BBY has a Debt to Equity ratio of 0.38. This is comparable to the rest of the industry: BBY outperforms 53.60% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.38
Debt/FCF 1.73
Altman-Z 4.33
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.
BBY has a worse Current ratio (1.00) 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.
With a Quick ratio value of 0.37, BBY is not doing good in the industry: 67.20% of the companies in the same industry are doing better.
Industry RankSector Rank
Current Ratio 1
Quick Ratio 0.37

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4

3. Growth

3.1 Past

BBY shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -10.14%.
Measured over the past 5 years, BBY shows a small growth in Earnings Per Share. The EPS has been growing by 3.47% on average per year.
The Revenue has decreased by -6.15% in the past year.
Measured over the past years, BBY shows a small growth in Revenue. The Revenue has been growing by 0.27% on average per year.
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

BBY is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 12.98% yearly.
BBY is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 1.24% yearly.
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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6

4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 11.50, the valuation of BBY can be described as very reasonable.
Based on the Price/Earnings ratio, BBY is valued cheaply inside the industry as 80.80% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 28.60. BBY is valued rather cheaply when compared to this.
A Price/Forward Earnings ratio of 12.03 indicates a correct valuation of BBY.
80.00% of the companies in the same industry are more expensive than BBY, based on the Price/Forward Earnings ratio.
BBY's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 20.15.
Industry RankSector Rank
PE 11.5
Fwd PE 12.03

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, BBY is valued cheaply inside the industry as 81.60% of the companies are valued more expensively.
BBY's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. BBY is cheaper than 62.40% of the companies in the same industry.
Industry RankSector Rank
P/FCF 23.4
EV/EBITDA 5.86

4.3 Compensation for Growth

The decent profitability rating of BBY may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)3.31
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.
BBY's Dividend Yield is rather good when compared to the industry average which is at 3.25. BBY pays more dividend than 96.00% of the companies 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.
BBY has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)15.34%
Div Incr Years6
Div Non Decr Years6

5.3 Sustainability

BBY pays out 64.54% of its income as dividend. This is not a sustainable payout ratio.
BBY's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP64.54%
EPS Next 2Y3.24%
EPS Next 3Y6.77%

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