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 126 industry peers in the Specialty Retail industry. While BBY has a great profitability rating, 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. These ratings could make BBY a good candidate for dividend investing.



7

1. Profitability

1.1 Basic Checks

In the past year BBY was profitable.
BBY had a positive operating cash flow in the past year.
In the past 5 years BBY has always been profitable.
Each year in the past 5 years BBY had a positive operating cash flow.

1.2 Ratios

The Return On Assets of BBY (8.29%) is better than 76.19% of its industry peers.
Looking at the Return On Equity, with a value of 40.65%, BBY belongs to the top of the industry, outperforming 89.68% of the companies in the same industry.
BBY has a Return On Invested Capital of 19.06%. This is amongst the best in the industry. BBY outperforms 88.89% of its industry peers.
BBY had an Average Return On Invested Capital over the past 3 years of 25.19%. This is significantly above the industry average of 13.85%.
The last Return On Invested Capital (19.06%) for BBY is well below the 3 year average (25.19%), which needs to be investigated, but indicates that BBY had better years and this may not be a problem.
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

The Profit Margin of BBY (2.86%) is better than 62.70% of its industry peers.
BBY's Profit Margin has declined in the last couple of years.
With a Operating Margin value of 3.97%, BBY perfoms like the industry average, outperforming 57.94% of the companies in the same industry.
In the last couple of years the Operating Margin of BBY has declined.
The Gross Margin of BBY (22.10%) is worse than 77.78% of its industry peers.
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.
The debt/assets ratio for BBY is higher compared to a year ago.

2.2 Solvency

BBY has an Altman-Z score of 4.35. This indicates that BBY is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 4.35, BBY belongs to the best of the industry, outperforming 88.10% 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.
Looking at the Debt to FCF ratio, with a value of 1.73, BBY is in the better half of the industry, outperforming 73.02% 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 (0.38) which is comparable to the rest of the industry.
Industry RankSector Rank
Debt/Equity 0.38
Debt/FCF 1.73
Altman-Z 4.35
ROIC/WACC2.13
WACC8.95%

2.3 Liquidity

BBY has a Current 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.
BBY's Current ratio of 1.00 is on the low side compared to the rest of the industry. BBY is outperformed by 81.75% of its industry peers.
A Quick Ratio of 0.37 indicates that BBY may have some problems paying its short term obligations.
BBY has a worse Quick ratio (0.37) than 69.05% of its industry peers.
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.
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.
Looking at the last year, BBY shows a decrease in Revenue. The Revenue has decreased by -6.15% in the last 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 13.90% yearly.
BBY is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 1.84% yearly.
EPS Next Y-4.44%
EPS Next 2Y3.24%
EPS Next 3Y6.81%
EPS Next 5Y13.9%
Revenue Next Year-3.1%
Revenue Next 2Y-0.55%
Revenue Next 3Y0.63%
Revenue Next 5Y1.84%

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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5

4. Valuation

4.1 Price/Earnings Ratio

BBY is valuated reasonably with a Price/Earnings ratio of 11.69.
Compared to the rest of the industry, the Price/Earnings ratio of BBY indicates a rather cheap valuation: BBY is cheaper than 80.16% of the companies listed in the same industry.
BBY's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 25.20.
A Price/Forward Earnings ratio of 12.24 indicates a correct valuation of BBY.
Based on the Price/Forward Earnings ratio, BBY is valued a bit cheaper than 77.78% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.60, BBY is valued a bit cheaper.
Industry RankSector Rank
PE 11.69
Fwd PE 12.24

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of BBY indicates a somewhat cheap valuation: BBY is cheaper than 76.19% of the companies listed in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of BBY is on the same level as its industry peers.
Industry RankSector Rank
P/FCF 23.8
EV/EBITDA 5.99

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)3.37
EPS Next 2Y3.24%
EPS Next 3Y6.81%

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7

5. Dividend

5.1 Amount

BBY has a Yearly Dividend Yield of 4.95%, which is a nice return.
Compared to an average industry Dividend Yield of 3.51, BBY pays a better dividend. On top of this BBY pays more dividend than 96.03% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.45, BBY pays a better dividend.
Industry RankSector Rank
Dividend Yield 4.95%

5.2 History

On average, the dividend of BBY grows each year by 15.34%, which is quite nice.
BBY has been paying a dividend for at least 10 years, so it has 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.
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 3Y6.81%

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