SpartanNash (NASDAQ: SPTN) and Whole Foods Market (NASDAQ:WFM) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.

Dividends

SpartanNash pays an annual dividend of $0.66 per share and has a dividend yield of 2.7%. Whole Foods Market pays an annual dividend of $0.72 per share and has a dividend yield of 1.7%. SpartanNash pays out 37.9% of its earnings in the form of a dividend. Whole Foods Market pays out 59.0% 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. SpartanNash is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares SpartanNash and Whole Foods Market’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
SpartanNash $7.93 billion 0.12 $228.44 million $1.74 14.30
Whole Foods Market $15.88 billion 0.85 $1.32 billion $1.22 34.42

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

Profitability

This table compares SpartanNash and Whole Foods Market’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SpartanNash 0.83% 10.00% 4.01%
Whole Foods Market 2.85% 13.51% 7.02%

Volatility & Risk

SpartanNash has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500. Comparatively, Whole Foods Market has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for SpartanNash and Whole Foods Market, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SpartanNash 1 3 0 0 1.75
Whole Foods Market 3 18 2 0 1.96

SpartanNash presently has a consensus target price of $25.25, suggesting a potential upside of 1.49%. Whole Foods Market has a consensus target price of $37.06, suggesting a potential downside of 11.75%. Given SpartanNash’s higher possible upside, equities research analysts clearly believe SpartanNash is more favorable than Whole Foods Market.

Institutional & Insider Ownership

88.2% of SpartanNash shares are held by institutional investors. Comparatively, 79.2% of Whole Foods Market shares are held by institutional investors. 3.0% of SpartanNash shares are held by company insiders. Comparatively, 1.3% of Whole Foods Market shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Whole Foods Market beats SpartanNash on 9 of the 16 factors compared between the two stocks.

About SpartanNash

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.

About Whole Foods Market

Whole Foods Market, Inc. is engaged in the business of natural and organic foods supermarket. The Company operates approximately 456 stores in the United States, Canada and the United Kingdom. Its stores have an average size of approximately 39,000 square feet, and are supported by its distribution centers, bake house facilities, commissary kitchens, seafood-processing facilities, a produce procurement center, and a specialty coffee and tea procurement and roasting operation, among others. It offers over 30,000 organic stock keeping units (SKUs), covering various areas of its store, including produce, packaged goods, bulk, frozen, dairy, meat, bakery, prepared foods, coffee, tea, beer, wine, cheese, nutritional supplements, vitamins, body care, pet foods and household goods. The Company’s brands include 365 Everyday Value, Allegro Coffee, Whole Foods Market, Whole Paws, and Engine 2 Plant-Strong. It also offers approximately 400 temporary exclusives.

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