West Marine (NASDAQ: WMAR) and Staples (NASDAQ:SPLS) are both consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, analyst recommendations, valuation, risk and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for West Marine and Staples, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
West Marine 0 2 0 0 2.00
Staples 0 5 1 0 2.17

West Marine presently has a consensus price target of $10.49, suggesting a potential downside of 19.13%. Staples has a consensus price target of $8.85, suggesting a potential downside of 13.66%. Given Staples’ stronger consensus rating and higher probable upside, analysts clearly believe Staples is more favorable than West Marine.

Valuation & Earnings

This table compares West Marine and Staples’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
West Marine $697.67 million 0.47 $39.13 million $0.31 41.82
Staples $17.91 billion 0.38 $1.22 billion ($2.35) -4.36

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

Risk and Volatility

West Marine has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, Staples has a beta of 1.74, suggesting that its stock price is 74% more volatile than the S&P 500.

Dividends

West Marine pays an annual dividend of $0.20 per share and has a dividend yield of 1.5%. Staples pays an annual dividend of $0.48 per share and has a dividend yield of 4.7%. West Marine pays out 64.5% of its earnings in the form of a dividend. Staples pays out -20.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Staples is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

57.9% of West Marine shares are owned by institutional investors. Comparatively, 85.6% of Staples shares are owned by institutional investors. 27.5% of West Marine shares are owned by insiders. Comparatively, 0.7% of Staples shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares West Marine and Staples’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
West Marine 1.15% 2.56% 1.83%
Staples -8.53% 15.09% 6.94%

Summary

Staples beats West Marine on 11 of the 15 factors compared between the two stocks.

West Marine Company Profile

West Marine, Inc. is a waterlife outfitter for cruisers, sailors, anglers and paddlesports enthusiasts. The Company offers a selection of core boating and water recreation products, primarily serving the needs of boat owners and professionals providing services to them. It services its customers through physical stores and two e-commerce Websites. It is a specialty retailer of boating supplies, gear, apparel, footwear and other waterlife-related products. It operates approximately 260 stores located in approximately 40 states, Puerto Rico and Canada. Its products include boating products and merchandise expansion products. Its boating products include maintenance, electronics, sailboat hardware, anchors/docking/moorings, engine systems, boats/outboards, ventilation, navigation, trailering, seating/boat covers and barbecues/appliances. Its merchandise expansion products include clothing accessories, fishing, watersports, paddlesports, coolers and waterlife lifestyle accessories.

Staples Company Profile

Staples, Inc. (Staples) is a provider of products and services that serve the needs of business customers and consumers. The Company offers a range of print and marketing and technology services. The Company’s segments include North American Delivery, North American Retail and Other. The North American Delivery segment consists of the United States and Canadian businesses, including Staples Business Advantage, staples.com, staples.ca, and quill.com, that sell and deliver products and services primarily to businesses. The North American Retail segment includes its retail stores in the United States and Canada. As of January 28, 2017, its North American Retail segment consisted of 1,255 stores in the United States and 304 stores in Canada. The Company has other businesses in Australia, South America and Asia. Staples Australia serves primarily contract and government customers in Australia and New Zealand. The Company also has operations in China, Argentina, Taiwan and Brazil.

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