The financial management of Best Buy (BBY) has been excellent this millennium. The management team is committed to keeping large swaths of cash on hand, and the company boasts $3.4 billion in cash against $1.3 billion in debt. It has kept the dividend payout ratio low in the 30% range, and has retired gobs and gobs of stock since 2004. Approximately 490 million shares of Best Buy stock has been reduced to 317 million shares over the past twelve years, meaning that each share of Best Buy represents 35% more ownership in the business than it did in 2004.
Sounds like a decent investment opportunity, right? Au contraire, prospective investor.
The high share repurchases at Best Buy have masked the fact that revenues are in decline, net profit margins have been decreasing, and the growth of the e-commerce platform has an illusory element.
In the 1990s, Best Buy had a … Read the rest of this article!