US Foods (NYSE: USFD) and Sprouts Farmers Market (NASDAQ:SFM) are both mid-cap consumer staples companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, profitability, earnings, dividends, institutional ownership, analyst recommendations and risk.
This table compares US Foods and Sprouts Farmers Market’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sprouts Farmers Market||3.01%||21.00%||9.02%|
This is a breakdown of current ratings and target prices for US Foods and Sprouts Farmers Market, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sprouts Farmers Market||2||8||11||0||2.43|
US Foods currently has a consensus target price of $31.75, indicating a potential upside of 1.54%. Sprouts Farmers Market has a consensus target price of $24.31, indicating a potential downside of 2.16%. Given US Foods’ stronger consensus rating and higher probable upside, equities research analysts clearly believe US Foods is more favorable than Sprouts Farmers Market.
Institutional & Insider Ownership
96.9% of US Foods shares are held by institutional investors. Comparatively, 89.7% of Sprouts Farmers Market shares are held by institutional investors. 1.6% of US Foods shares are held by insiders. Comparatively, 2.6% of Sprouts Farmers Market shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Earnings and Valuation
This table compares US Foods and Sprouts Farmers Market’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|US Foods||$22.92 billion||0.31||$209.79 million||$1.17||26.73|
|Sprouts Farmers Market||$4.05 billion||0.82||$124.30 million||$0.97||25.62|
US Foods has higher revenue and earnings than Sprouts Farmers Market. Sprouts Farmers Market is trading at a lower price-to-earnings ratio than US Foods, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
US Foods has a beta of 1.38, meaning that its stock price is 38% more volatile than the S&P 500. Comparatively, Sprouts Farmers Market has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500.
US Foods beats Sprouts Farmers Market on 8 of the 14 factors compared between the two stocks.
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.
About Sprouts Farmers Market
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.
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