Ingles Markets (NASDAQ: IMKTA) and SpartanNash (NASDAQ:SPTN) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, institutional ownership, risk, earnings, analyst recommendations, dividends and profitability.

Dividends

Ingles Markets pays an annual dividend of $0.66 per share and has a dividend yield of 1.9%. SpartanNash pays an annual dividend of $0.66 per share and has a dividend yield of 2.6%. Ingles Markets pays out 24.8% of its earnings in the form of a dividend. SpartanNash pays out -32.7% 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. SpartanNash is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Ingles Markets and SpartanNash’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ingles Markets $4.00 billion 0.18 $53.87 million $2.66 13.14
SpartanNash $7.73 billion 0.12 $56.82 million ($2.02) -12.41

SpartanNash has higher revenue and earnings than Ingles Markets. SpartanNash is trading at a lower price-to-earnings ratio than Ingles Markets, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ingles Markets and SpartanNash’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ingles Markets 1.35% 10.92% 3.14%
SpartanNash -0.93% 10.35% 4.00%

Insider & Institutional Ownership

59.4% of Ingles Markets shares are owned by institutional investors. Comparatively, 86.1% of SpartanNash shares are owned by institutional investors. 30.3% of Ingles Markets shares are owned by insiders. Comparatively, 3.0% of SpartanNash shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Ingles Markets has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, SpartanNash has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Ingles Markets and SpartanNash, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ingles Markets 0 0 0 0 N/A
SpartanNash 1 5 0 0 1.83

SpartanNash has a consensus price target of $23.20, indicating a potential downside of 7.46%. Given SpartanNash’s higher probable upside, analysts plainly believe SpartanNash is more favorable than Ingles Markets.

Summary

SpartanNash beats Ingles Markets on 8 of the 14 factors compared between the two stocks.

About Ingles Markets

Ingles Markets, Incorporated (Ingles) is a supermarket chain in the southeast United States. The Company’s segments include retail grocery and other. Its other segment consists of fluid dairy operations and shopping center rentals. As of September 24, 2016, the Company operated 201 supermarkets in Georgia, North Carolina, South Carolina, Tennessee, Virginia and Alabama. The Company locates its supermarkets primarily in suburban areas, small towns and rural communities. Ingles supermarkets offer customers a range of food products, including grocery, meat and dairy products, produce, frozen foods and other perishables and non-food products. Its non-food products include fuel centers, pharmacies, health and beauty care products and general merchandise. The Company focuses on selling products to its customers through the development of organic products, bakery departments and prepared foods, including delicatessen sections.

About SpartanNash

SpartanNash Company is a multi-regional grocery distributor and grocery retailer. The Company’s core businesses include distributing grocery products to independent grocery retailers (independent retailers), select national retailers, its corporate owned retail stores, and the United States military commissaries. The Company operates through three segments: Food Distribution, Military and Retail. The Food Distribution segment provides a range of nationally branded and private brand grocery products and perishable food products to independent retailers, food service distributors and its corporate owned retail stores. The Military segment contracts with manufacturers to distribute a range of grocery products primarily to military commissaries and exchanges located in the United States, the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain and Egypt. As of December 31, 2016, the Retail segment operated 157 corporate owned retail stores in the Midwest and Great Lakes regions.

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