United Natural Foods (NASDAQ: UNFI) and Diplomat Pharmacy (NYSE:DPLO) are both small-cap consumer staples companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, profitabiliy, analyst recommendations, valuation and dividends.

Profitability

This table compares United Natural Foods and Diplomat Pharmacy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Natural Foods 1.38% 8.21% 4.46%
Diplomat Pharmacy 0.38% 7.91% 4.35%

Institutional and Insider Ownership

98.6% of United Natural Foods shares are owned by institutional investors. Comparatively, 72.6% of Diplomat Pharmacy shares are owned by institutional investors. 1.3% of United Natural Foods shares are owned by insiders. Comparatively, 35.4% of Diplomat Pharmacy shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares United Natural Foods and Diplomat Pharmacy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
United Natural Foods $9.15 billion 0.20 $316.02 million $2.49 14.47
Diplomat Pharmacy $4.49 billion 0.22 $75.88 million $0.25 58.04

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

Volatility & Risk

United Natural Foods has a beta of 1.38, suggesting that its share price is 38% more volatile than the S&P 500. Comparatively, Diplomat Pharmacy has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for United Natural Foods and Diplomat Pharmacy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Natural Foods 3 8 3 0 2.00
Diplomat Pharmacy 1 8 1 0 2.00

United Natural Foods currently has a consensus price target of $40.08, indicating a potential upside of 11.20%. Diplomat Pharmacy has a consensus price target of $17.58, indicating a potential upside of 21.18%. Given Diplomat Pharmacy’s higher possible upside, analysts plainly believe Diplomat Pharmacy is more favorable than United Natural Foods.

Summary

United Natural Foods beats Diplomat Pharmacy on 9 of the 13 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.

Diplomat Pharmacy Company Profile

Diplomat Pharmacy, Inc. (Diplomat) operates a specialty pharmacy business, which stocks, dispenses and distributes prescriptions for various biotechnology and specialty pharmaceutical manufacturers. The Company operates through specialty pharmacy services segment. The Company’s primary focus is on medication management programs for individuals with chronic diseases, including oncology, immunology, hepatitis, multiple sclerosis, specialty infusion therapy, and various other serious and/or long-term conditions. The Company provides specialty pharmacy support services to a national network of retailers and independent pharmacy groups, hospitals and health systems. The Company offers various services, such as specialty drug dispensing, retail specialty services, hospital and health system services, and hub services. The Company’s patient care system is used to coordinate and track patient adherence and safety.

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