Kroger Company (The) (NYSE: KR) and DAVIDsTEA (NASDAQ:DTEA) are both retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, analyst recommendations, risk, dividends, profitability and institutional ownership.

Dividends

Kroger Company (The) pays an annual dividend of $0.50 per share and has a dividend yield of 2.3%. DAVIDsTEA does not pay a dividend. Kroger Company (The) pays out 30.3% of its earnings in the form of a dividend. Kroger Company (The) has raised its dividend for 8 consecutive years.

Profitability

This table compares Kroger Company (The) and DAVIDsTEA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kroger Company (The) 1.32% 28.04% 4.94%
DAVIDsTEA -3.98% 1.51% 1.19%

Insider & Institutional Ownership

74.6% of Kroger Company (The) shares are owned by institutional investors. Comparatively, 18.8% of DAVIDsTEA shares are owned by institutional investors. 0.9% of Kroger Company (The) shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Kroger Company (The) and DAVIDsTEA’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kroger Company (The) $117.02 billion 0.17 $5.51 billion $1.65 13.08
DAVIDsTEA N/A N/A N/A ($0.26) -19.23

Kroger Company (The) has higher revenue and earnings than DAVIDsTEA. DAVIDsTEA is trading at a lower price-to-earnings ratio than Kroger Company (The), indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Kroger Company (The) has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500. Comparatively, DAVIDsTEA has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Kroger Company (The) and DAVIDsTEA, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kroger Company (The) 1 15 8 0 2.29
DAVIDsTEA 1 3 0 0 1.75

Kroger Company (The) currently has a consensus price target of $28.86, indicating a potential upside of 33.75%. DAVIDsTEA has a consensus price target of $6.75, indicating a potential upside of 35.00%. Given DAVIDsTEA’s higher possible upside, analysts plainly believe DAVIDsTEA is more favorable than Kroger Company (The).

Summary

Kroger Company (The) beats DAVIDsTEA on 11 of the 15 factors compared between the two stocks.

Kroger Company (The) Company Profile

The Kroger Co. (Kroger) manufactures and processes food for sale in its supermarkets. The Company operates supermarkets, multi-department stores, jewelry stores and convenience stores throughout the United States. As of January 28, 2017, it had operated approximately 4,000 owned or leased supermarkets, convenience stores, fine jewelry stores, distribution warehouses and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United States. As of January 28, 2017, Kroger operated, either directly or through its subsidiaries, 2,796 supermarkets under a range of local banner names, of which 2,255 had pharmacies and 1,445 had fuel centers. As of January 28, 2017, the Company offered ClickList and Harris Teeter ExpressLane, personalized, order online, pick up at the store services at 637 of its supermarkets. P$$T, Check This Out and Heritage Farm are the three brands. Its other brands include Simple Truth and Simple Truth Organic.

DAVIDsTEA Company Profile

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.

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