Contrasting Weis Markets (WMK) and US Foods (USFD)

Weis Markets (NYSE: WMK) and US Foods (NYSE:USFD) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, dividends, risk, earnings and valuation.

Dividends

Weis Markets pays an annual dividend of $1.20 per share and has a dividend yield of 3.1%. US Foods does not pay a dividend. Weis Markets pays out 42.7% of its earnings in the form of a dividend.

Volatility and Risk

Weis Markets has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500. Comparatively, US Foods has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Weis Markets $3.14 billion 0.33 $87.16 million $2.81 13.74
US Foods $22.92 billion 0.29 $209.79 million $1.17 25.54

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

Insider and Institutional Ownership

31.9% of Weis Markets shares are held by institutional investors. Comparatively, 97.1% of US Foods shares are held by institutional investors. 26.9% of Weis Markets shares are held by company insiders. Comparatively, 1.6% of US Foods shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Weis Markets 2.16% 8.13% 5.39%
US Foods 1.11% 12.64% 3.61%

Analyst Ratings

This is a summary of recent recommendations and price targets for Weis Markets and US Foods, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Weis Markets 0 0 0 0 N/A
US Foods 0 4 5 0 2.56

US Foods has a consensus price target of $33.38, suggesting a potential upside of 11.70%. Given US Foods’ higher possible upside, analysts plainly believe US Foods is more favorable than Weis Markets.

Summary

US Foods beats Weis Markets on 9 of the 15 factors compared between the two stocks.

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.

About US Foods

US Foods Holding Corp. is a holding company. The Company is a foodservice distributor in the United States. The Company, through US Foods, Inc. (USF), markets and primarily distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the United States. These customers include independently owned single and multi-unit restaurants, regional concepts, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities, and retail locations. As of December 31, 2016, the Company provided approximately 400,000 fresh, frozen, and dry food stock-keeping units (SKUs), as well as non-food items, sourced from over 5,000 suppliers. As of January 31, 2017, it maintained 75 primary operating facilities, consisting of its 60 distribution centers and other supporting facilities.

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