Critical Contrast: Systemax (SYX) & Best Buy Co. (BBY)
Systemax (NYSE: SYX) and Best Buy Co. (NYSE:BBY) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, profitability, analyst recommendations, earnings and valuation.
This table compares Systemax and Best Buy Co.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Best Buy Co.||3.01%||26.81%||8.73%|
Institutional and Insider Ownership
24.5% of Systemax shares are owned by institutional investors. Comparatively, 92.5% of Best Buy Co. shares are owned by institutional investors. 69.6% of Systemax shares are owned by insiders. Comparatively, 0.8% of Best Buy Co. shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This is a summary of recent ratings for Systemax and Best Buy Co., as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Best Buy Co.||3||3||16||0||2.59|
Systemax currently has a consensus price target of $31.00, indicating a potential upside of 30.25%. Best Buy Co. has a consensus price target of $58.50, indicating a potential downside of 3.58%. Given Systemax’s stronger consensus rating and higher possible upside, research analysts plainly believe Systemax is more favorable than Best Buy Co..
Systemax pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. Best Buy Co. pays an annual dividend of $1.36 per share and has a dividend yield of 2.2%. Systemax pays out -114.3% of its earnings in the form of a dividend. Best Buy Co. pays out 36.5% 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. Systemax has increased its dividend for 5 consecutive years.
Valuation & Earnings
This table compares Systemax and Best Buy Co.’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Systemax||$1.71 billion||0.52||$42.30 million||($0.35)||-68.00|
|Best Buy Co.||$39.49 billion||0.47||$2.45 billion||$3.73||16.27|
Best Buy Co. has higher revenue and earnings than Systemax. Systemax is trading at a lower price-to-earnings ratio than Best Buy Co., indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Systemax has a beta of 0.23, suggesting that its share price is 77% less volatile than the S&P 500. Comparatively, Best Buy Co. has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500.
Best Buy Co. beats Systemax on 10 of the 16 factors compared between the two stocks.
Systemax Company Profile
Systemax Inc. is a direct marketer of brand name and private label products. The Company’s segments are Industrial Products Group (IPG), EMEA Technology Products Group (EMEA), and Corporate and Other (Corporate). The IPG segment sells an array of maintenance, repair and operational (MRO) products, which are marketed in North America. The Company offers a selection of products that are manufactured for its own design and marketed under the trademarks: Global, GlobalIndustrial.com, Nexel Relius, Paramount and Interion. EMEA sells products categorized as Information and Communications Technology (ICT) and Consumer Electronics (CE), as well as related technical services, such as configuration, implementation, network security, and other technical services. CE products include television and video; audio; cameras and surveillance; Global Positioning System (GPS); cell phones; video games, and home and electronics accessories.
Best Buy Co. Company Profile
Best Buy Co., Inc. is a provider of technology products, services and solutions. The Company offers products and services to the customers visiting its stores, engaging with Geek Squad agents, or using its Websites or mobile applications. It has operations in the United States, Canada and Mexico. The Company operates through two segments: Domestic and International. The Domestic segment consists of the operations in all states, districts and territories of the United States, under various brand names, including Best Buy, bestbuy.com, Best Buy Mobile, Best Buy Direct, Best Buy Express, Geek Squad, Magnolia Home Theater, and Pacific Kitchen and Home. The International segment consists of all operations in Canada and Mexico under the brand names, Best Buy, bestbuy.com.ca, bestbuy.com.mx, Best Buy Express, Best Buy Mobile and Geek Squad. As of December 31, 2016, the Company operated 1,200 large-format and 400 small-format stores throughout its Domestic and International segments.
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