United Natural Foods (NASDAQ: UNFI) and Sprouts Farmers Market (NASDAQ:SFM) are both mid-cap non-cyclical consumer goods & services companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, profitability, risk, earnings, valuation and institutional ownership.

Volatility and Risk

United Natural Foods has a beta of 1.38, meaning that its stock price is 38% more volatile than the S&P 500. Comparatively, Sprouts Farmers Market has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for United Natural Foods and Sprouts Farmers Market, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Natural Foods 5 9 5 0 2.00
Sprouts Farmers Market 2 8 11 0 2.43

United Natural Foods currently has a consensus price target of $41.71, suggesting a potential downside of 1.38%. Sprouts Farmers Market has a consensus price target of $24.31, suggesting a potential upside of 11.73%. Given Sprouts Farmers Market’s stronger consensus rating and higher possible upside, analysts clearly believe Sprouts Farmers Market is more favorable than United Natural Foods.

Profitability

This table compares United Natural Foods and Sprouts Farmers Market’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Natural Foods 1.40% 8.10% 4.50%
Sprouts Farmers Market 3.01% 21.00% 9.02%

Valuation and Earnings

This table compares United Natural Foods and Sprouts Farmers Market’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
United Natural Foods $9.27 billion 0.23 $130.15 million $2.56 16.52
Sprouts Farmers Market $4.05 billion 0.72 $124.30 million $0.97 22.43

United Natural Foods has higher revenue and earnings than Sprouts Farmers Market. United Natural Foods is trading at a lower price-to-earnings ratio than Sprouts Farmers Market, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

88.4% of Sprouts Farmers Market shares are owned by institutional investors. 1.4% of United Natural Foods shares are owned by company insiders. Comparatively, 2.6% of Sprouts Farmers Market shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Sprouts Farmers Market beats United Natural Foods on 10 of the 14 factors compared between the two stocks.

United Natural Foods Company Profile

United Natural Foods, Inc. is a distributor and retailer of natural, organic and specialty products. The Company’s segments include Wholesale and Other. The Wholesale segment is engaged in the national distribution of natural, organic and specialty foods, produce and related products in the United States and Canada. The Other segment includes a retail division, which engages in the sale of natural foods and related products to the general public through retail storefronts on the east coast of the United States; a manufacturing division, which engages in importing, roasting and packaging of nuts, seeds, dried fruit and snack items, and its branded product lines. Its operations consist of three operating divisions: Wholesale Division, Retail Division, and Manufacturing and Branded Products divisions. As of July 30, 2016, the Company had offered 100,000 natural, organic and specialty foods, and non-food products, consisting of national, regional and private-label brands.

Sprouts Farmers Market Company Profile

Sprouts Farmers Market, Inc. is a food retailer. The Company operates as a grocery store that offers fresh, natural and organic food that includes fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, body care and natural household items catering to consumers’ interest in health and wellness. As of February 23, 2017, the Company operated 256 stores in 14 states. The Company categorizes the varieties of products it sells as perishable and non-perishable. The perishable product categories include produce, meat, seafood, deli and bakery. Its non-perishable product categories include grocery, vitamins and supplements, bulk items, dairy and dairy alternatives, frozen foods, beer and wine, and natural health and body care.

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