United Natural Foods (NASDAQ: UNFI) and GNC Holdings (NYSE:GNC) are both small-cap consumer staples companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.

Valuation & Earnings

This table compares United Natural Foods and GNC Holdings’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
United Natural Foods $9.27 billion 0.21 $318.94 million $2.56 14.88
GNC Holdings $2.48 billion 0.18 $278.86 million ($5.46) -1.22

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

Profitability

This table compares United Natural Foods and GNC Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Natural Foods 1.40% 8.10% 4.50%
GNC Holdings -15.11% -133.37% 3.95%

Volatility and Risk

United Natural Foods has a beta of 1.43, meaning that its share price is 43% more volatile than the S&P 500. Comparatively, GNC Holdings has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for United Natural Foods and GNC Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Natural Foods 5 9 5 0 2.00
GNC Holdings 5 2 0 0 1.29

United Natural Foods presently has a consensus price target of $42.18, suggesting a potential upside of 10.73%. GNC Holdings has a consensus price target of $7.58, suggesting a potential upside of 14.21%. Given GNC Holdings’ higher probable upside, analysts clearly believe GNC Holdings is more favorable than United Natural Foods.

Dividends

GNC Holdings pays an annual dividend of $0.20 per share and has a dividend yield of 3.0%. United Natural Foods does not pay a dividend. GNC Holdings pays out -3.7% of its earnings in the form of a dividend. GNC Holdings has increased its dividend for 4 consecutive years.

Insider & Institutional Ownership

64.1% of GNC Holdings shares are owned by institutional investors. 1.3% of United Natural Foods shares are owned by insiders. Comparatively, 1.9% of GNC Holdings shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

United Natural Foods beats GNC Holdings on 11 of the 17 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.

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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