Sprouts Farmers Market (NASDAQ: SFM) and Performance Food Group (NYSE:PFGC) are both mid-cap retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.

Profitability

This table compares Sprouts Farmers Market and Performance Food Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sprouts Farmers Market 2.96% 18.79% 8.65%
Performance Food Group 0.57% 14.73% 3.48%

Analyst Ratings

This is a summary of current ratings and price targets for Sprouts Farmers Market and Performance Food Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sprouts Farmers Market 1 10 9 0 2.40
Performance Food Group 0 6 5 0 2.45

Sprouts Farmers Market presently has a consensus target price of $25.27, suggesting a potential upside of 35.62%. Performance Food Group has a consensus target price of $29.00, suggesting a potential upside of 2.84%. Given Sprouts Farmers Market’s higher possible upside, analysts plainly believe Sprouts Farmers Market is more favorable than Performance Food Group.

Volatility and Risk

Sprouts Farmers Market has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500. Comparatively, Performance Food Group has a beta of -0.27, suggesting that its stock price is 127% less volatile than the S&P 500.

Insider and Institutional Ownership

88.0% of Sprouts Farmers Market shares are held by institutional investors. Comparatively, 78.7% of Performance Food Group shares are held by institutional investors. 2.6% of Sprouts Farmers Market shares are held by insiders. Comparatively, 3.7% of Performance Food Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Sprouts Farmers Market and Performance Food Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sprouts Farmers Market $4.34 billion 0.58 $295.71 million $0.90 20.70
Performance Food Group $16.76 billion 0.18 $342.30 million $0.93 30.32

Performance Food Group has higher revenue and earnings than Sprouts Farmers Market. Sprouts Farmers Market is trading at a lower price-to-earnings ratio than Performance Food Group, indicating that it is currently the more affordable of the two stocks.

Summary

Sprouts Farmers Market beats Performance Food Group on 8 of the 14 factors compared between the two stocks.

Sprouts Farmers Market Company Profile

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.

Performance Food Group Company Profile

Performance Food Group Company, through its subsidiaries, markets and distributes food and food-related products. The Company operates through three segments: Performance Foodservice, PFG Customized and Vistar. The Performance Foodservice segment distributes a range of national brands, customer brands, and branded food and food-related products. It sells to independent or street, and multi-unit or chain, restaurants and other institutions. Its PFG Customized segment provides service to family and casual dining restaurant chains, and fast casual and quick service restaurant chains. Its Vistar segment specializes in distributing candy, snacks, beverages and other items nationally to the vending, office coffee service, theater, hospitality and other channels. Its products include a range of frozen foods, such as meats, fully prepared appetizers and entrees, and desserts; a range of canned and dry foods; fresh meats; dairy products; beverage products, and snack and other products.

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