DavidsTea (DTEA) & Weis Markets (WMK) Critical Survey

DavidsTea (NASDAQ: DTEA) and Weis Markets (NYSE:WMK) are both small-cap non-cyclical consumer goods & services companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, risk and profitability.

Profitability

This table compares DavidsTea and Weis Markets’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DavidsTea -4.79% N/A N/A
Weis Markets 2.16% 8.13% 5.39%

Institutional & Insider Ownership

11.7% of DavidsTea shares are owned by institutional investors. Comparatively, 31.9% of Weis Markets shares are owned by institutional investors. 26.9% of Weis Markets shares are owned 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.

Earnings & Valuation

This table compares DavidsTea and Weis Markets’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
DavidsTea $164.02 million 0.59 -$4.83 million ($0.32) -11.72
Weis Markets $3.14 billion 0.35 $87.16 million $2.81 14.40

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

Analyst Ratings

This is a summary of recent recommendations for DavidsTea and Weis Markets, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DavidsTea 0 2 0 0 2.00
Weis Markets 0 0 0 0 N/A

DavidsTea presently has a consensus target price of $6.00, suggesting a potential upside of 60.00%. Given DavidsTea’s higher probable upside, equities analysts plainly believe DavidsTea is more favorable than Weis Markets.

Dividends

Weis Markets pays an annual dividend of $1.20 per share and has a dividend yield of 3.0%. DavidsTea does not pay a dividend. Weis Markets pays out 42.7% of its earnings in the form of a dividend.

Summary

Weis Markets beats DavidsTea on 10 of the 13 factors compared between the two stocks.

About DavidsTea

DAVIDsTEA Inc. is engaged in the retail and online sale of tea, tea accessories, and food and beverages in Canada and in the United States. The Company’s segments include Canada and the U.S. The Company is a branded retailer of specialty tea, offering approximately 150 loose-leaf teas, pre-packaged teas, tea sachets and tea-related gifts, accessories, and food and beverages primarily through approximately 190 DAVIDsTEA stores, which are operated by the Company, and its Website, davidstea.com. Additionally, the Company offers on-the-go tea beverages in its retail stores. The Company’s tea accessories include tea mugs, travel mugs, teacup sets, teapots, tea makers, kettles, infusers, filters, frothers, tins and spoons. The Company offers beverages range from the standard hot or iced tea to its Tea Lattes. The Company’s different flavors of loose-leaf tea span eight tea categories: white, green, oolong, black, pu’erh, mate, rooibos and herbal tea.

About Weis Markets

Weis Markets, Inc. is engaged principally in the retail sale of food in Pennsylvania and surrounding states. The Company’s retail food stores sell groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services, deli products, prepared foods, bakery products, beer and wine, fuel and general merchandise items, such as health and beauty care and household products. As of December 31, 2016, it had owned and operated approximately 204 retail food stores. The majority of the Company’s stores are concentrated in central and northeast Pennsylvania, central Maryland, suburban Washington, District of Columbia and Baltimore regions and New York’s Southern Tier. As of December 31, 2016, it had operated four stores in Delaware, 50 stores in Maryland, five stores in New Jersey, nine stores in New York, 121 stores in Pennsylvania, 13 stores in Virginia and two stores in West Virginia, for a total of 204 retail food stores operating under the Weis Markets name.

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