Costco Wholesale Corporation (NASDAQ: COST) and Burlington Stores (NYSE:BURL) are both mid-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Costco Wholesale Corporation and Burlington Stores, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Costco Wholesale Corporation 0 8 19 0 2.70
Burlington Stores 0 3 12 0 2.80

Costco Wholesale Corporation currently has a consensus price target of $178.83, suggesting a potential upside of 10.74%. Burlington Stores has a consensus price target of $105.38, suggesting a potential upside of 17.52%. Given Burlington Stores’ stronger consensus rating and higher possible upside, analysts plainly believe Burlington Stores is more favorable than Costco Wholesale Corporation.

Profitability

This table compares Costco Wholesale Corporation and Burlington Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Costco Wholesale Corporation 2.06% 20.45% 6.88%
Burlington Stores 4.46% -330.30% 10.19%

Institutional & Insider Ownership

72.4% of Costco Wholesale Corporation shares are held by institutional investors. 0.7% of Costco Wholesale Corporation shares are held by company insiders. Comparatively, 2.6% of Burlington Stores shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Costco Wholesale Corporation and Burlington Stores’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Costco Wholesale Corporation $123.28 billion 0.57 $5.19 billion $5.77 27.99
Burlington Stores $5.75 billion 1.06 $599.05 million $3.61 24.84

Costco Wholesale Corporation has higher revenue and earnings than Burlington Stores. Burlington Stores is trading at a lower price-to-earnings ratio than Costco Wholesale Corporation, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Costco Wholesale Corporation has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, Burlington Stores has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500.

Dividends

Costco Wholesale Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 1.2%. Burlington Stores does not pay a dividend. Costco Wholesale Corporation pays out 34.7% of its earnings in the form of a dividend. Costco Wholesale Corporation has increased its dividend for 13 consecutive years.

Summary

Costco Wholesale Corporation beats Burlington Stores on 10 of the 17 factors compared between the two stocks.

Costco Wholesale Corporation Company Profile

Costco Wholesale Corporation is engaged in the operation of membership warehouses in the United States and Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Australia, Spain, and through its subsidiaries in Taiwan and Korea. As of August 28, 2016, the Company operated 715 warehouses across the world. The Company’s average warehouse space is approximately 144,000 square feet. The Company’s warehouses on average operate on a seven-day, 70-hour week. The Company offers merchandise in various categories, which include foods (including dry foods, packaged foods and groceries); sundries (including snack foods, candy, alcoholic and nonalcoholic beverages, and cleaning supplies); hardlines (including appliances, electronics, health and beauty aids, hardware, and garden and patio); fresh foods (including meat, produce, deli and bakery); softlines (including apparel and small appliances), and other (including gas stations and pharmacy).

Burlington Stores Company Profile

Burlington Stores, Inc. is a retailer of branded apparel. As of January 28, 2017, the Company operated 592 retail stores, inclusive of an Internet store, in 45 states and Puerto Rico. Its product categories include coats, women, men, juniors, girls, boys, shoes, handbags and accessories, beauty and fragrance, home and toys. The product categories for coats include women’s coats and jackets, men’s coats and jackets, juniors coats and jackets, girls coats and jackets, boy’s coats and jackets, baby girl coats and jackets, and baby boy coats and jackets. The product categories for women include active wear, bottoms, coats and jackets, dresses, tops, scrubs, suit and suit separates, sweaters, swimwear and cover-ups. It also includes accessories, beauty and fragrance, handbags, jewelry, shoes and watches. The product categories for men include accessories, active wear, casual button down shirts, dress shirts, men’s coats jackets, fleece, graphic tees, hoodies and sweatshirts, and jeans.

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