PriceSmart (NASDAQ: PSMT) and Dollar Tree (NASDAQ:DLTR) are both mid-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitabiliy, earnings, dividends and risk.

Institutional and Insider Ownership

73.7% of PriceSmart shares are owned by institutional investors. Comparatively, 91.7% of Dollar Tree shares are owned by institutional investors. 28.0% of PriceSmart shares are owned by company insiders. Comparatively, 4.1% of Dollar Tree shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for PriceSmart and Dollar Tree, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PriceSmart 0 0 1 0 3.00
Dollar Tree 1 10 11 0 2.45

PriceSmart currently has a consensus target price of $102.00, indicating a potential upside of 21.14%. Dollar Tree has a consensus target price of $87.70, indicating a potential upside of 21.40%. Given Dollar Tree’s higher possible upside, analysts plainly believe Dollar Tree is more favorable than PriceSmart.

Volatility & Risk

PriceSmart has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500. Comparatively, Dollar Tree has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500.

Profitability

This table compares PriceSmart and Dollar Tree’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PriceSmart 3.13% 14.05% 8.26%
Dollar Tree 4.13% 17.68% 5.76%

Dividends

PriceSmart pays an annual dividend of $0.70 per share and has a dividend yield of 0.8%. Dollar Tree does not pay a dividend. PriceSmart pays out 22.7% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares PriceSmart and Dollar Tree’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PriceSmart $2.97 billion 0.85 $184.93 million $3.08 27.34
Dollar Tree $20.92 billion 0.82 $2.30 billion $3.65 19.79

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

Summary

Dollar Tree beats PriceSmart on 9 of the 16 factors compared between the two stocks.

PriceSmart Company Profile

PriceSmart, Inc., through its subsidiaries, is engaged in the international operation of membership shopping in warehouse clubs. In addition, the Company operates distribution centers and offices in the United States. The Company’s segments include the United States, Central America, the Caribbean and Colombia. The Company owns and operates the United States-style membership shopping warehouse clubs in Latin America and the Caribbean. It offers private label consumer goods to individuals and businesses. The Company offers three types of memberships, such as Business, Diamond and in Costa Rica Platinum memberships. It promotes Business membership through its marketing programs and offers certain merchandise targeted to businesses, such as restaurants, hotels, convenience stores, offices and institutions. The Diamond membership is focused on individuals and families. The Company offers Platinum memberships in Costa Rica.

Dollar Tree Company Profile

Dollar Tree, Inc. is an operator of discount variety stores. As of January 28, 2017, the Company operated 14,334 stores in 48 states and the District of Columbia, and five Canadian provinces. Its segments include Dollar Tree and Family Dollar. The Dollar Tree segment is the operator of discount variety stores offering merchandise at a fixed price. The Family Dollar segment operates a chain of general merchandise retail discount stores providing consumers with a selection of merchandise in neighborhood stores. Its stores operate under the names of Dollar Tree, Family Dollar and Dollar Tree Canada. As of January 28, 2017, the Dollar Tree segment included 6,360 stores operating under the Dollar Tree and Dollar Tree Canada brands, 11 distribution centers in the United States and two in Canada and a Store Support Center in Chesapeake, Virginia, and 11 distribution centers and a Store Support Center in Matthews, North Carolina under the Family Dollar brand.

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