Best Buy Co Inc (NYSE: BBY)

Sector: Consumer Cyclical Industry: Specialty Retail CIK: 0000764478
Market Cap 17.85 Bn
P/B 5.71
P/E 11.66
P/S 0.41
ROIC (Qtr) 8.97
Div Yield % 4.39
Rev 1y % (Qtr) 2.40
Total Debt (Qtr) 4.09 Bn
Debt/Equity (Qtr) 1.54
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About

Best Buy Co., Inc., known in the market as Best Buy, is a multinational consumer electronics retailer that operates in the United States and Canada. The company, which trades under the ticker symbol BBY, was established in 1966 and has since grown to become one of the largest consumer electronics retailers globally. Best Buy's operations span across various customer needs, including computing and mobile phones, consumer electronics, appliances, entertainment, and services. Best Buy generates revenue through the sale of a diverse range of products,...

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Investment thesis

Bull case

  • Strong operating cash flow of 2.22B provides robust 0.54x coverage of total debt 4.09B, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 2.22B provides strong 16.21x coverage of stock compensation 137M, indicating sustainable incentive practices.
  • Strong tangible asset base of 16B provides 3.91x coverage of total debt 4.09B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 2.22B provides exceptional 45.33x coverage of interest expenses 49M, showing strong debt service capability.
  • Robust free cash flow of 1.51B exceeds capital expenditure of 707M by 2.14x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 2.22B barely covers its investment activities of (737M), with a coverage ratio of -3.01, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 923M against inventory of 7.99B, the 0.12 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 2.22B provides thin coverage of dividend payments of (802M) with a -2.77 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 923M provide limited coverage of acquisition spending of (27M), which is -34.19x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 951M show weak coverage of depreciation charges of 844M, with a 1.13 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Specialty Retail
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ULTA Ulta Beauty, Inc. 32.20 Bn 27.06 2.69 2.57 Bn
2 WSM Williams Sonoma Inc 29.62 Bn 25.19 3.40 1.47 Bn
3 TSCO Tractor Supply Co /De/ 28.42 Bn 25.23 1.93 5.72 Bn
4 DKS Dick'S Sporting Goods, Inc. 24.98 Bn 88.10 4.64 7.70 Bn
5 CASY Caseys General Stores Inc 24.65 Bn 59.49 1.65 2.92 Bn
6 BBY Best Buy Co Inc 17.85 Bn 11.66 0.41 4.09 Bn
7 MUSA Murphy USA Inc. 15.91 Bn 61.33 1.35 2.75 Bn
8 FIVE Five Below, Inc 11.68 Bn 37.94 2.64 2.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.23 2.23
EV to Cash from Ops. EV/CFO 9.25 14.70
EV to Debt EV to Debt 5.06 79.39
EV to EBIT EV/EBIT 10.01 -40.16
EV to EBITDA EV/EBITDA 7.27 11.51
EV to Free Cash Flow [EV/FCF] EV/FCF 14.25 -286.14
EV to Market Cap EV to Market Cap 1.16 6.33
EV to Revenue EV/Rev 0.48 2.39
Price to Book Value [P/B] P/B 5.71 32.78
Price to Earnings [P/E] P/E 11.66 -36.32
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.80 -4.05
Dividend Payout Ratio % Div Payout % (Qtr) 124.30 14.19
Dividend per Basic Share Div per Share (Qtr) 3.79 0.71
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 52.74 18.58
Interest Coverage Int. cover (Qtr) 19.41 4.43
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.56 13.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 43.55 33.75
Dividend Growth (1y) % Div 1y % (Qtr) 1.34 0.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -48.08 -272.99
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -30.20 588.45
EBIT Growth (1y) % EBIT 1y % (Qtr) -44.45 29.27
EBT Growth (1y) % EBT 1y % (Qtr) -45.66 -92.23
EPS Growth (1y) % EPS 1y % (Qtr) -48.13 -121.86
FCF Growth (1y) % FCF 1y % (Qtr) 46.99 71.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -0.62 2.50
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 2.49 1.24
Cash Payout Ratio Cash Payout (Qtr) 0.27 0.04
Cash Ratio Cash Ratio (Qtr) 0.09 0.74
Current Ratio Curr Ratio (Qtr) 1.05 3.56
Debt to Equity Ratio Debt/Equity (Qtr) 1.54 25.92
Interest Cover Ratio Int Coverage (Qtr) 19.41 4.43
Times Interest Earned Times Interest Earned (Qtr) 19.41 4.43
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 4.30 -42.64
EBIT Margin % EBIT Margin % (Qtr) 2.27 -131.12
EBT Margin % EBT Margin % (Qtr) 2.16 -64.70
Gross Margin % Gross Margin % (Qtr) 22.50 30.93
Net Profit Margin % Net Margin % (Qtr) 1.50 -65.71