Head to Head Contrast: Kroger (NYSE:KR) vs. Sprouts Farmers Market (SFM)
Kroger (NYSE: KR) and Sprouts Farmers Market (NASDAQ:SFM) are both mid-cap retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, earnings and profitability.
Volatility and Risk
Kroger has a beta of 0.91, meaning that its stock price is 9% less volatile than the S&P 500. Comparatively, Sprouts Farmers Market has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500.
This table compares Kroger and Sprouts Farmers Market’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sprouts Farmers Market||3.01%||21.00%||9.02%|
Kroger pays an annual dividend of $0.50 per share and has a dividend yield of 1.6%. Sprouts Farmers Market does not pay a dividend. Kroger pays out 29.8% of its earnings in the form of a dividend. Kroger has increased its dividend for 9 consecutive years.
Earnings & Valuation
This table compares Kroger and Sprouts Farmers Market’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Kroger||$115.34 billion||0.24||$1.98 billion||$1.68||18.65|
|Sprouts Farmers Market||$4.05 billion||0.92||$124.30 million||$0.97||28.85|
Kroger has higher revenue and earnings than Sprouts Farmers Market. Kroger 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
79.6% of Kroger shares are held by institutional investors. Comparatively, 89.9% of Sprouts Farmers Market shares are held by institutional investors. 0.9% of Kroger shares are held by company insiders. Comparatively, 2.6% of Sprouts Farmers Market shares are held by company 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.
This is a breakdown of current ratings and recommmendations for Kroger and Sprouts Farmers Market, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sprouts Farmers Market||2||8||11||0||2.43|
Kroger currently has a consensus target price of $29.90, indicating a potential downside of 4.59%. Sprouts Farmers Market has a consensus target price of $25.50, indicating a potential downside of 8.86%. Given Kroger’s stronger consensus rating and higher possible upside, research analysts clearly believe Kroger is more favorable than Sprouts Farmers Market.
Kroger beats Sprouts Farmers Market on 9 of the 16 factors compared between the two stocks.
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.
About Sprouts Farmers Market
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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