Sysco Corporation (NYSE: SYY) and GNC Holdings (NYSE:GNC) are both consumer staples companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, risk, valuation and profitabiliy.

Valuation & Earnings

This table compares Sysco Corporation and GNC Holdings’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sysco Corporation $54.60 billion 0.51 $3.00 billion $1.90 27.62
GNC Holdings $2.48 billion 0.27 $278.86 million ($5.30) -1.87

Sysco Corporation has higher revenue and earnings than GNC Holdings. GNC Holdings is trading at a lower price-to-earnings ratio than Sysco Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

Sysco Corporation pays an annual dividend of $1.32 per share and has a dividend yield of 2.5%. GNC Holdings pays an annual dividend of $0.40 per share and has a dividend yield of 4.0%. Sysco Corporation pays out 69.5% of its earnings in the form of a dividend. GNC Holdings pays out -7.5% 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. Sysco Corporation has raised its dividend for 46 consecutive years and GNC Holdings has raised its dividend for 4 consecutive years. GNC Holdings is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Sysco Corporation has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500. Comparatively, GNC Holdings has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500.

Insider and Institutional Ownership

78.4% of Sysco Corporation shares are held by institutional investors. Comparatively, 79.5% of GNC Holdings shares are held by institutional investors. 8.8% of Sysco Corporation shares are held by insiders. Comparatively, 1.9% of GNC Holdings shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Sysco Corporation and GNC Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sysco Corporation 1.93% 47.28% 7.60%
GNC Holdings -14.56% 285.93% 4.49%

Analyst Ratings

This is a breakdown of current recommendations for Sysco Corporation and GNC Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sysco Corporation 0 7 7 0 2.50
GNC Holdings 5 2 0 0 1.29

Sysco Corporation presently has a consensus target price of $56.42, indicating a potential upside of 7.50%. GNC Holdings has a consensus target price of $9.67, indicating a potential downside of 2.65%. Given Sysco Corporation’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Sysco Corporation is more favorable than GNC Holdings.

Summary

Sysco Corporation beats GNC Holdings on 11 of the 16 factors compared between the two stocks.

Sysco Corporation Company Profile

Sysco Corporation (Sysco) is a distributor of food and related products primarily to the foodservice or food-away-from-home industry. The Company’s segments include Broadline, SYGMA and Other. The Broadline segment includes its Broadline operations located in the Bahamas, Canada, Costa Rica, Ireland, Mexico and the United States. Broadline operating companies distribute a full line of food products and a range of non-food products to both traditional and chain restaurant customers, hospitals, schools, hotels, industrial caterers and other venues where foodservice products are served. SYGMA operating companies distribute a full line of food products and a range of non-food products to certain chain restaurant customer locations. The Other segment includes the Company’s specialty produce; custom-cut meat operations; lodging industry segments; a company that distributes specialty imported products; a company that distributes to international customers, and Sysco Ventures platform.

GNC Holdings Company Profile

GNC Holdings, Inc. is a specialty retailer of health, wellness and performance products, which include protein, performance supplements, weight management supplements, vitamins, herbs and greens, wellness supplements, health and beauty, food and drink and other general merchandise. The Company’s operations consist of purchasing raw materials, formulating and manufacturing products and selling the finished products. It operates in three segments: U.S. and Canada, International and Manufacturing/Wholesale. Its U.S. and Canada segment generates revenues primarily from sales of products to customers at its Company-owned stores in the United States, Canada and Puerto Rico, through its Websites, GNC.com and LuckyVitamin.com. Its International segment generates revenue primarily to its international franchisees. Its Manufacturing/Wholesale segment comprises its manufacturing operations in South Carolina and its wholesale partner relationships.

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