Conn’s (CONN) and Best Buy (BBY) Head-To-Head Comparison

Conn’s (NASDAQ: CONN) and Best Buy (NYSE:BBY) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Conn’s and Best Buy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Conn’s 0 1 5 0 2.83
Best Buy 3 10 7 0 2.20

Conn’s currently has a consensus target price of $37.80, indicating a potential upside of 47.95%. Best Buy has a consensus target price of $70.47, indicating a potential downside of 3.82%. Given Conn’s’ stronger consensus rating and higher probable upside, analysts clearly believe Conn’s is more favorable than Best Buy.

Valuation & Earnings

This table compares Conn’s and Best Buy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Conn’s $1.52 billion 0.53 $6.46 million $0.95 26.89
Best Buy $42.15 billion 0.51 $1.00 billion $4.42 16.51

Best Buy has higher revenue and earnings than Conn’s. Best Buy is trading at a lower price-to-earnings ratio than Conn’s, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Conn’s and Best Buy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Conn’s 0.43% 5.72% 1.57%
Best Buy 2.37% 32.68% 10.01%

Insider & Institutional Ownership

67.6% of Conn’s shares are owned by institutional investors. Comparatively, 85.0% of Best Buy shares are owned by institutional investors. 3.5% of Conn’s shares are owned by insiders. Comparatively, 0.8% of Best Buy shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Best Buy pays an annual dividend of $1.80 per share and has a dividend yield of 2.5%. Conn’s does not pay a dividend. Best Buy pays out 40.7% of its earnings in the form of a dividend. Best Buy has increased its dividend for 6 consecutive years.

Volatility and Risk

Conn’s has a beta of 1.71, indicating that its share price is 71% more volatile than the S&P 500. Comparatively, Best Buy has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500.

Summary

Best Buy beats Conn’s on 10 of the 17 factors compared between the two stocks.

Conn’s Company Profile

Conn's, Inc. operates as a specialty retailer of durable consumer goods and related services in the United States. It operates through two segments, Retail and Credit. The company's stores provide furniture and mattress, including furniture and related accessories for the living room, dining room, and bedroom, as well as traditional and specialty mattresses; home appliances comprising refrigerators, freezers, washers, dryers, dishwashers, and ranges; and home office products consisting of computers, printers, and accessories. Its stores also offer consumer electronics, such as LED, OLED, Ultra HD, and Internet-ready televisions; and Blu-ray players, and home theater and portable audio equipment. The company also provides short- and medium-term financing to its retail customers, as well as offers product support services, such as product repair services, repair service agreements, and various credit insurance products. As of January 31, 2017, it operated 113 retail locations in Alabama, Arizona, Colorado, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, and Texas. Conn's, Inc. was founded in 1890 and is based in The Woodlands, Texas.

Best Buy Company Profile

Best Buy Co., Inc. operates as a retailer of technology products, services, and solutions in the United States, Canada, and Mexico. The company operates in two segments, Domestic and International. Its stores provide consumer electronics, including digital imaging, health and fitness, home automation, home theater, and portable audio products; computing and mobile phones, such as computing and peripherals, networking products, tablets, smart watches, and e-readers, as well as mobile phones comprising related mobile network carrier commissions; and entertainment products, including drones, movies, music, and technology toys, as well as gaming hardware and software, and virtual reality and other software products. The company's stores also offer appliances, which comprise dishwashers, laundry appliances, ovens, refrigerators, blenders, coffee makers, etc.; and other products, such as beverages, snacks, and sundry items, as well as baby products, luggage, and sporting goods. In addition, it provides services comprising consultation, design, delivery, installation, set-up, protection plan, repair, technical support, and educational services. The company offers its products through stores and Websites under the Best Buy, bestbuy.com, Best Buy Mobile, Best Buy Direct, Best Buy Express, Geek Squad, Magnolia Home Theater, Pacific Kitchen and Home, bestbuy.ca, and bestbuy.com.mx brand names, as well as through mobile applications and call centers. It has approximately 1,200 large-format and 300 small-format stores. The company was formerly known as Sound of Music, Inc. Best Buy Co., Inc. was founded in 1966 and is headquartered in Richfield, Minnesota.

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