United Natural Foods (NASDAQ: UNFI) and DAVIDsTEA (NASDAQ:DTEA) are both consumer staples companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, dividends, risk, earnings, analyst recommendations, valuation and institutional ownership.

Profitability

This table compares United Natural Foods and DAVIDsTEA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Natural Foods 1.40% 8.10% 4.50%
DAVIDsTEA -3.98% 1.51% 1.19%

Insider & Institutional Ownership

16.8% of DAVIDsTEA shares are owned by institutional investors. 1.3% of United Natural Foods shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility and Risk

United Natural Foods has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500. Comparatively, DAVIDsTEA has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500.

Valuation and Earnings

This table compares United Natural Foods and DAVIDsTEA’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
United Natural Foods $9.15 billion 0.24 $316.02 million $2.56 16.81
DAVIDsTEA N/A N/A N/A ($0.26) -17.12

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

Analyst Recommendations

This is a breakdown of recent recommendations for United Natural Foods and DAVIDsTEA, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Natural Foods 4 9 4 0 2.00
DAVIDsTEA 1 3 0 0 1.75

United Natural Foods currently has a consensus price target of $42.13, suggesting a potential downside of 2.08%. DAVIDsTEA has a consensus price target of $6.75, suggesting a potential upside of 51.69%. Given DAVIDsTEA’s higher possible upside, analysts clearly believe DAVIDsTEA is more favorable than United Natural Foods.

Summary

United Natural Foods beats DAVIDsTEA on 9 of the 12 factors compared between the two stocks.

United Natural Foods Company Profile

United Natural Foods, Inc. is a distributor and retailer of natural, organic and specialty products. The Company’s segments include Wholesale and Other. The Wholesale segment is engaged in the national distribution of natural, organic and specialty foods, produce and related products in the United States and Canada. The Other segment includes a retail division, which engages in the sale of natural foods and related products to the general public through retail storefronts on the east coast of the United States; a manufacturing division, which engages in importing, roasting and packaging of nuts, seeds, dried fruit and snack items, and its branded product lines. Its operations consist of three operating divisions: Wholesale Division, Retail Division, and Manufacturing and Branded Products divisions. As of July 30, 2016, the Company had offered 100,000 natural, organic and specialty foods, and non-food products, consisting of national, regional and private-label brands.

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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