Whole Foods Market (NASDAQ: WFM) and Kroger Company (The) (NYSE:KR) are both large-cap retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, valuation, profitabiliy and institutional ownership.

Volatility & Risk

Whole Foods Market has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500. Comparatively, Kroger Company (The) has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500.

Valuation & Earnings

This table compares Whole Foods Market and Kroger Company (The)’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Whole Foods Market $15.86 billion 0.86 $1.33 billion $1.26 33.87
Kroger Company (The) $115.34 billion 0.18 $5.87 billion $1.66 13.43

Kroger Company (The) has higher revenue and earnings than Whole Foods Market. Kroger Company (The) is trading at a lower price-to-earnings ratio than Whole Foods Market, indicating that it is currently the more affordable of the two stocks.

Dividends

Whole Foods Market pays an annual dividend of $0.56 per share and has a dividend yield of 1.3%. Kroger Company (The) pays an annual dividend of $0.48 per share and has a dividend yield of 2.2%. Whole Foods Market pays out 44.4% of its earnings in the form of a dividend. Kroger Company (The) pays out 28.9% 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. Whole Foods Market has increased its dividend for 8 consecutive years. Kroger Company (The) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Whole Foods Market and Kroger Company (The), as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Whole Foods Market 5 13 8 0 2.12
Kroger Company (The) 1 14 10 0 2.36

Whole Foods Market currently has a consensus price target of $34.45, suggesting a potential downside of 19.28%. Kroger Company (The) has a consensus price target of $32.43, suggesting a potential upside of 45.48%. Given Kroger Company (The)’s stronger consensus rating and higher probable upside, analysts clearly believe Kroger Company (The) is more favorable than Whole Foods Market.

Insider & Institutional Ownership

91.4% of Whole Foods Market shares are owned by institutional investors. Comparatively, 77.9% of Kroger Company (The) shares are owned by institutional investors. 1.3% of Whole Foods Market shares are owned by company insiders. Comparatively, 0.9% of Kroger Company (The) shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Whole Foods Market and Kroger Company (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Whole Foods Market 2.54% 13.72% 7.02%
Kroger Company (The) 1.35% 29.10% 5.29%

Summary

Kroger Company (The) beats Whole Foods Market on 9 of the 17 factors compared between the two stocks.

Whole Foods Market Company Profile

Whole Foods Market, Inc. is engaged in the business of natural and organic foods supermarket. The Company operates approximately 456 stores in the United States, Canada and the United Kingdom. Its stores have an average size of approximately 39,000 square feet, and are supported by its distribution centers, bake house facilities, commissary kitchens, seafood-processing facilities, a produce procurement center, and a specialty coffee and tea procurement and roasting operation, among others. It offers over 30,000 organic stock keeping units (SKUs), covering various areas of its store, including produce, packaged goods, bulk, frozen, dairy, meat, bakery, prepared foods, coffee, tea, beer, wine, cheese, nutritional supplements, vitamins, body care, pet foods and household goods. The Company’s brands include 365 Everyday Value, Allegro Coffee, Whole Foods Market, Whole Paws, and Engine 2 Plant-Strong. It also offers approximately 400 temporary exclusives.

Kroger Company (The) Company Profile

The Kroger Co. (Kroger) manufactures and processes food for sale in its supermarkets. The Company operates supermarkets, multi-department stores, jewelry stores and convenience stores throughout the United States. As of January 28, 2017, it had operated approximately 4,000 owned or leased supermarkets, convenience stores, fine jewelry stores, distribution warehouses and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United States. As of January 28, 2017, Kroger operated, either directly or through its subsidiaries, 2,796 supermarkets under a range of local banner names, of which 2,255 had pharmacies and 1,445 had fuel centers. As of January 28, 2017, the Company offered ClickList and Harris Teeter ExpressLane, personalized, order online, pick up at the store services at 637 of its supermarkets. P$$T, Check This Out and Heritage Farm are the three brands. Its other brands include Simple Truth and Simple Truth Organic.

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