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

Overall BBY gets a fundamental rating of 6 out of 10. We evaluated BBY 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

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.
BBY had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

BBY has a better Return On Assets (8.29%) than 76.19% of its industry peers.
BBY has a better Return On Equity (40.65%) than 89.68% of its industry peers.
BBY has a better Return On Invested Capital (19.06%) than 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 14.53%.
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.
BBY has a Operating Margin (3.97%) which is comparable to the rest of the industry.
In the last couple of years the Operating Margin of BBY has declined.
BBY has a Gross Margin of 22.10%. This is in the lower half of the industry: BBY underperforms 77.78% 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

With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), BBY 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 4.35 indicates that BBY is not in any danger for bankruptcy at the moment.
BBY has a Altman-Z score of 4.35. This is amongst the best in the industry. BBY outperforms 88.89% 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.
BBY has a better Debt to FCF ratio (1.73) than 73.02% of its industry peers.
BBY has a Debt/Equity ratio of 0.38. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of BBY (0.38) 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
WACC8.94%

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 has a Current ratio of 1.00. This is amonst the worse of the industry: BBY underperforms 81.75% of its industry peers.
A Quick Ratio of 0.37 indicates that BBY may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.37, BBY is doing worse than 69.05% 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.
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.
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 13.90% on average over the next years. This is quite good.
Based on estimates for the next years, BBY will show a small growth in Revenue. The Revenue will grow by 1.84% on average per year.
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

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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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5

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 11.78, which indicates a very decent valuation of BBY.
Based on the Price/Earnings ratio, BBY is valued cheaper than 80.16% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 24.95, BBY is valued rather cheaply.
BBY is valuated correctly with a Price/Forward Earnings ratio of 12.32.
Based on the Price/Forward Earnings ratio, BBY is valued a bit cheaper than the industry average as 76.98% of the companies are valued more expensively.
BBY's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.40.
Industry RankSector Rank
PE 11.78
Fwd PE 12.32

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, BBY is valued a bit cheaper than 75.40% of the companies in the same industry.
BBY's Price/Free Cash Flow ratio is in line with the industry average.
Industry RankSector Rank
P/FCF 23.97
EV/EBITDA 6

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)3.4
EPS Next 2Y3.24%
EPS Next 3Y6.81%

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7

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 4.95%, BBY is a good candidate for dividend investing.
BBY's Dividend Yield is rather good when compared to the industry average which is at 3.51. BBY pays more dividend than 96.03% of the companies 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

The dividend of BBY is nicely growing with an annual growth rate of 15.34%!
BBY has been paying a dividend for at least 10 years, so it has 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.
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 3Y6.81%

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