Reviewing Sprouts Farmers Market (SFM) & GNC Holdings (GNC)
Sprouts Farmers Market (NASDAQ: SFM) and GNC Holdings (NYSE:GNC) are both retail/wholesale companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, risk, valuation and analyst recommendations.
GNC Holdings pays an annual dividend of $0.20 per share and has a dividend yield of 2.4%. Sprouts Farmers Market does not pay a dividend. GNC Holdings pays out -3.8% of its earnings in the form of a dividend. Sprouts Farmers Market has raised its dividend for 4 consecutive years.
Insider & Institutional Ownership
87.7% of Sprouts Farmers Market shares are held by institutional investors. Comparatively, 65.5% of GNC Holdings shares are held by institutional investors. 2.6% of Sprouts Farmers Market shares are held by insiders. Comparatively, 1.9% of GNC Holdings shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Earnings and Valuation
This table compares Sprouts Farmers Market and GNC Holdings’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Sprouts Farmers Market||$4.34 billion||0.59||$295.71 million||$0.90||21.12|
|GNC Holdings||$2.48 billion||0.23||$278.86 million||($5.30)||-1.55|
Sprouts Farmers Market has higher revenue and earnings than GNC Holdings. GNC Holdings is trading at a lower price-to-earnings ratio than Sprouts Farmers Market, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and target prices for Sprouts Farmers Market and GNC Holdings, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sprouts Farmers Market||1||10||10||0||2.43|
Sprouts Farmers Market presently has a consensus target price of $25.13, indicating a potential upside of 32.17%. GNC Holdings has a consensus target price of $8.08, indicating a potential downside of 1.30%. Given Sprouts Farmers Market’s stronger consensus rating and higher probable upside, research analysts clearly believe Sprouts Farmers Market is more favorable than GNC Holdings.
This table compares Sprouts Farmers Market and GNC Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sprouts Farmers Market||2.96%||18.79%||8.65%|
Risk & Volatility
Sprouts Farmers Market has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500. Comparatively, GNC Holdings has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.
Sprouts Farmers Market beats GNC Holdings on 13 of the 17 factors compared between the two stocks.
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.
About GNC Holdings
GNC Holdings, Inc. is a specialty retailer of health, wellness and performance products, which include protein, performance supplements, weight management supplements, vitamins, herbs and greens, wellness supplements, health and beauty, food and drink and other general merchandise. The Company’s operations consist of purchasing raw materials, formulating and manufacturing products and selling the finished products. It operates in three segments: U.S. and Canada, International and Manufacturing/Wholesale. Its U.S. and Canada segment generates revenues primarily from sales of products to customers at its Company-owned stores in the United States, Canada and Puerto Rico, through its Websites, GNC.com and LuckyVitamin.com. Its International segment generates revenue primarily to its international franchisees. Its Manufacturing/Wholesale segment comprises its manufacturing operations in South Carolina and its wholesale partner relationships.
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