Whole Foods Market (WFMI) & Wal-Mart Stores (WMT) Critical Analysis

Whole Foods Market (NASDAQ: WFMI) and Wal-Mart Stores (NYSE:WMT) are both non-cyclical consumer goods & services companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.

Institutional & Insider Ownership

29.9% of Wal-Mart Stores shares are owned by institutional investors. 51.4% of Wal-Mart Stores shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Whole Foods Market and Wal-Mart Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Whole Foods Market 2.85% 13.51% 7.02%
Wal-Mart Stores 2.60% 16.87% 6.61%

Earnings & Valuation

This table compares Whole Foods Market and Wal-Mart Stores’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Whole Foods Market N/A N/A N/A N/A N/A
Wal-Mart Stores $490.01 billion 0.48 $32.87 billion $4.16 18.84

Wal-Mart Stores has higher revenue and earnings than Whole Foods Market.

Dividends

Wal-Mart Stores pays an annual dividend of $2.04 per share and has a dividend yield of 2.6%. Whole Foods Market does not pay a dividend. Wal-Mart Stores pays out 49.0% of its earnings in the form of a dividend. Wal-Mart Stores has raised its dividend for 42 consecutive years.

Analyst Ratings

This is a summary of current recommendations for Whole Foods Market and Wal-Mart Stores, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Whole Foods Market 0 0 0 0 N/A
Wal-Mart Stores 2 17 14 0 2.36

Wal-Mart Stores has a consensus target price of $80.47, indicating a potential upside of 2.68%. Given Wal-Mart Stores’ higher possible upside, analysts clearly believe Wal-Mart Stores is more favorable than Whole Foods Market.

Summary

Wal-Mart Stores beats Whole Foods Market on 8 of the 11 factors compared between the two stocks.

About Whole Foods Market

Whole Foods Market, Inc. is engaged in the business of natural and organic foods supermarket. The Company operates approximately 456 stores in the United States, Canada and the United Kingdom. Its stores have an average size of approximately 39,000 square feet, and are supported by its distribution centers, bake house facilities, commissary kitchens, seafood-processing facilities, a produce procurement center, and a specialty coffee and tea procurement and roasting operation, among others. It offers over 30,000 organic stock keeping units (SKUs), covering various areas of its store, including produce, packaged goods, bulk, frozen, dairy, meat, bakery, prepared foods, coffee, tea, beer, wine, cheese, nutritional supplements, vitamins, body care, pet foods and household goods. The Company’s brands include 365 Everyday Value, Allegro Coffee, Whole Foods Market, Whole Paws, and Engine 2 Plant-Strong. It also offers approximately 400 temporary exclusives.

About Wal-Mart Stores

Wal-Mart Stores, Inc. is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company operates through three segments: Walmart U.S., Walmart International and Sam’s Club. The Walmart U.S. segment includes its mass merchant concept in the United States operating under the Walmart or Wal-Mart brands, as well as digital retail. The Walmart International segment consists of the Company’s operations outside of the United States, including various retail Websites. The Walmart International segment includes various formats divided into three categories: retail, wholesale and other. These categories consist of various formats, including supercenters, supermarkets, and warehouse clubs, such as Sam’s Clubs, cash and carry, home improvement, specialty electronics, apparel stores, drug stores and convenience stores, as well as digital retail. The Sam’s Club segment includes the warehouse membership clubs in the United States, and samsclub.com.

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