Best Buy (NYSE:BBY) and The TJX Companies (NYSE:TJX) are both large-cap retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, earnings, dividends, risk and valuation.
Analyst Recommendations
This is a breakdown of recent ratings for Best Buy and The TJX Companies, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Best Buy | 3 | 9 | 13 | 0 | 2.40 |
| The TJX Companies | 0 | 4 | 18 | 1 | 2.87 |
Best Buy presently has a consensus price target of $109.00, suggesting a potential downside of 11.01%. The TJX Companies has a consensus price target of $69.0417, suggesting a potential downside of 0.59%. Given The TJX Companies' stronger consensus rating and higher probable upside, analysts plainly believe The TJX Companies is more favorable than Best Buy.
Profitability
This table compares Best Buy and The TJX Companies' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Best Buy | 3.79% | 52.17% | 11.03% |
| The TJX Companies | 2.24% | 14.34% | 2.78% |
Institutional & Insider Ownership
76.6% of Best Buy shares are held by institutional investors. Comparatively, 88.8% of The TJX Companies shares are held by institutional investors. 0.6% of Best Buy shares are held by company insiders. Comparatively, 0.2% of The TJX Companies shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Dividends
Best Buy pays an annual dividend of $2.80 per share and has a dividend yield of 2.3%. The TJX Companies pays an annual dividend of $1.04 per share and has a dividend yield of 1.5%. Best Buy pays out 46.1% of its earnings in the form of a dividend. The TJX Companies pays out 39.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Best Buy has increased its dividend for 1 consecutive years and The TJX Companies has increased its dividend for 1 consecutive years.
Earnings & Valuation
This table compares Best Buy and The TJX Companies' revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Best Buy | $43.64 billion | 0.70 | $1.54 billion | $6.07 | 20.18 |
| The TJX Companies | $41.72 billion | 2.01 | $3.27 billion | $2.67 | 26.01 |
The TJX Companies has lower revenue, but higher earnings than Best Buy. Best Buy is trading at a lower price-to-earnings ratio than The TJX Companies, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Best Buy has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500. Comparatively, The TJX Companies has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500.
Summary
The TJX Companies beats Best Buy on 9 of the 17 factors compared between the two stocks.
