Contrasting SpartanNash (NASDAQ:SPTN) and Wal-Mart Stores (WMT)

SpartanNash (NASDAQ: SPTN) and Wal-Mart Stores (NYSE:WMT) are both retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, dividends, analyst recommendations, institutional ownership, valuation, risk and earnings.

Analyst Recommendations

This is a summary of recent recommendations for SpartanNash and Wal-Mart Stores, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SpartanNash 1 3 1 2.00
Wal-Mart Stores 3 16 14 2.33

SpartanNash currently has a consensus target price of $26.50, suggesting a potential upside of 0.99%. Wal-Mart Stores has a consensus target price of $79.67, suggesting a potential downside of 0.91%. Given SpartanNash’s higher possible upside, equities research analysts plainly believe SpartanNash is more favorable than Wal-Mart Stores.

Profitability

This table compares SpartanNash and Wal-Mart Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SpartanNash 0.79% 10.03% 4.10%
Wal-Mart Stores 2.79% 16.96% 6.68%

Institutional and Insider Ownership

87.3% of SpartanNash shares are owned by institutional investors. Comparatively, 30.1% of Wal-Mart Stores shares are owned by institutional investors. 3.0% of SpartanNash shares are owned by insiders. Comparatively, 51.4% of Wal-Mart Stores shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares SpartanNash and Wal-Mart Stores’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
SpartanNash $7.86 billion 0.13 $225.80 million $1.65 15.90
Wal-Mart Stores $487.51 billion 0.50 $32.97 billion $4.41 18.23

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

Risk & Volatility

SpartanNash has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.Comparatively, Wal-Mart Stores has a beta of 0.29, indicating that its share price is 71% less volatile than the S&P 500.

Dividends

SpartanNash pays an annual dividend of $0.66 per share and has a dividend yield of 2.5%. Wal-Mart Stores pays an annual dividend of $2.04 per share and has a dividend yield of 2.5%. SpartanNash pays out 40.0% of its earnings in the form of a dividend. Wal-Mart Stores pays out 46.3% 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. Wal-Mart Stores has increased its dividend for 42 consecutive years. Wal-Mart Stores is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Wal-Mart Stores beats SpartanNash on 13 of the 17 factors compared between the two stocks.

SpartanNash Company Profile

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.

Wal-Mart Stores Company Profile

Wal-Mart Stores, Inc. is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company operates through three segments: Walmart U.S., Walmart International and Sam’s Club. The Walmart U.S. segment includes its mass merchant concept in the United States operating under the Walmart or Wal-Mart brands, as well as digital retail. The Walmart International segment consists of the Company’s operations outside of the United States, including various retail Websites. The Walmart International segment includes various formats divided into three categories: retail, wholesale and other. These categories consist of various formats, including supercenters, supermarkets, and warehouse clubs, such as Sam’s Clubs, cash and carry, home improvement, specialty electronics, apparel stores, drug stores and convenience stores, as well as digital retail. The Sam’s Club segment includes the warehouse membership clubs in the United States, and samsclub.com.

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