Safeway (NYSE: SWY) and SYSCO (NYSE:SYY) are both mid-cap non-cyclical consumer goods & services companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, analyst recommendations, profitability, institutional ownership, risk, dividends and earnings.

Dividends

SYSCO pays an annual dividend of $1.32 per share and has a dividend yield of 2.2%. Safeway does not pay a dividend. SYSCO pays out 60.3% of its earnings in the form of a dividend. Safeway has raised its dividend for 12 consecutive years and SYSCO has raised its dividend for 46 consecutive years.

Volatility & Risk

Safeway has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500. Comparatively, SYSCO has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500.

Profitability

This table compares Safeway and SYSCO’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Safeway -0.26% -1.66% -0.69%
SYSCO 2.12% 58.47% 7.68%

Valuation and Earnings

This table compares Safeway and SYSCO’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Safeway N/A N/A N/A $0.12 292.50
SYSCO $55.37 billion 0.57 $1.14 billion $2.19 27.73

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Safeway and SYSCO, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Safeway 0 0 0 0 N/A
SYSCO 0 5 7 0 2.58

SYSCO has a consensus price target of $58.40, suggesting a potential downside of 3.84%. Given SYSCO’s higher probable upside, analysts plainly believe SYSCO is more favorable than Safeway.

Insider and Institutional Ownership

80.1% of SYSCO shares are held by institutional investors. 9.6% of SYSCO shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

SYSCO beats Safeway on 11 of the 14 factors compared between the two stocks.

Safeway Company Profile

Safeway Inc., is an food and drug retail company. The Company owns and operates GroceryWorks.com Operating Company, LLC, an online grocery channel doing business under the names Safeway.com and Vons.com. Blackhawk, a majority-owned subsidiary of Safeway, is a prepaid payment network utilizing proprietary technology to offer gift cards, other prepaid products and payment services. Blackhawk’s payment network supports its three primary constituents: consumers who purchase the products and services Blackhawk offers, content providers who offer branded products that are redeemable for goods and services, and distribution partners who sell the products. Blackhawk’s product offerings include gift cards, prepaid telecom products and prepaid financial services products, including general purpose reloadable cards and Blackhawk’s reload network.

SYSCO 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.

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