Best Buy Co. Inc (BBY)
Profitability ratios
Return on sales
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | |
|---|---|---|---|---|---|
| Gross profit margin | 22.60% | 22.10% | 21.41% | 22.49% | 22.37% |
| Operating profit margin | 3.04% | 3.62% | 3.88% | 5.87% | 5.06% |
| Pretax margin | 3.13% | 3.73% | 3.86% | 5.85% | 5.03% |
| Net profit margin | 2.23% | 2.86% | 3.06% | 4.74% | 3.80% |
Best Buy Co. Inc has shown relatively stable gross profit margins over the past five years, ranging from 21.41% to 22.6%. This indicates the company's ability to efficiently manage its production costs and generate profits from its sales.
However, the company's operating profit margins have fluctuated, decreasing from 5.06% in January 30, 2021, to 3.04% in February 1, 2025. This downward trend suggests that Best Buy may be facing challenges in controlling operating expenses or that its operating income is not growing at the same pace as its revenues.
Similarly, the pretax margins have also experienced a decline from 5.03% in January 30, 2021, to 3.13% in February 1, 2025. This indicates that the company's profitability before tax has been decreasing over the years.
The net profit margins have followed a similar trend, dropping from 3.8% in January 30, 2021, to 2.23% in February 1, 2025. This suggests that Best Buy's bottom-line profitability has been impacted, possibly due to factors such as increasing costs or lower revenue growth.
Overall, while Best Buy has maintained a relatively stable gross profit margin, the declining trend in operating profit, pretax, and net profit margins over the years may indicate potential challenges in managing costs and maximizing profitability.
Return on investment
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 8.54% | 10.52% | 11.36% | 17.36% | 12.54% |
| Return on assets (ROA) | 6.27% | 8.29% | 8.98% | 14.02% | 9.43% |
| Return on total capital | 34.16% | 39.81% | 46.12% | 72.07% | 41.59% |
| Return on equity (ROE) | 33.01% | 40.65% | 50.77% | 81.26% | 39.20% |
From the provided data, we can analyze the profitability ratios of Best Buy Co. Inc as follows:
1. Operating return on assets (Operating ROA):
- In January 2021, the Operating ROA was at 12.54%, showing the percentage of operating income generated for each dollar of assets.
- This ratio increased to 17.36% by January 2022, indicating improved operational efficiency and profitability.
- However, there was a decline to 11.36% by January 2023, and a further decrease to 10.52% by February 2024, possibly signaling challenges in maintaining profitability.
- By February 2025, the Operating ROA stood at 8.54%, suggesting a downward trend in operational performance and asset utilization.
2. Return on assets (ROA):
- The ROA in January 2021 was 9.43%, indicating the company's ability to generate profits from its total assets.
- This ratio increased to 14.02% by January 2022, reflecting improved overall profitability.
- However, there was a decline to 8.98% by January 2023, and a further decrease to 8.29% by February 2024, which may indicate challenges in asset efficiency.
- By February 2025, the ROA dropped to 6.27%, suggesting a decrease in the company's ability to generate profits relative to its assets.
3. Return on total capital:
- In January 2021, the Return on total capital was 41.59%, showing the percentage return generated for each dollar invested in the business.
- This ratio significantly increased to 72.07% by January 2022, indicating strong returns on capital investment.
- However, there was a decline to 46.12% by January 2023 and further to 39.81% by February 2024, which may indicate challenges in efficiently utilizing total capital.
- By February 2025, the Return on total capital stood at 34.16%, showing a continued decrease in the return generated on total capital.
4. Return on equity (ROE):
- In January 2021, the ROE was 39.20%, indicating the company's ability to generate profit from shareholder equity.
- This ratio significantly increased to 81.26% by January 2022, reflecting strong returns to equity investors.
- However, there was a decline to 50.77% by January 2023 and further to 40.65% by February 2024, suggesting a decrease in returns to equity holders.
- By February 2025, the ROE dropped to 33.01%, indicating a downward trend in returns to shareholders.
Overall, the profitability ratios of Best Buy Co. Inc show varying trends over the analyzed period, with fluctuations in operating performance, asset utilization, capital efficiency, and returns to shareholders. These ratios provide insights into the company's financial health and efficiency in generating profits from its assets and investments.