Sprouts Farmers Market (NASDAQ: SFM) and Kroger (NYSE:KR) are both mid-cap non-cyclical consumer goods & services companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, earnings, analyst recommendations, institutional ownership, dividends, valuation and risk.

Valuation & Earnings

This table compares Sprouts Farmers Market and Kroger’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sprouts Farmers Market $4.05 billion 0.80 $124.30 million $0.97 25.14
Kroger $115.34 billion 0.21 $1.98 billion $1.68 16.53

Kroger has higher revenue and earnings than Sprouts Farmers Market. Kroger 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.

Risk and Volatility

Sprouts Farmers Market has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500. Comparatively, Kroger has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500.

Dividends

Kroger pays an annual dividend of $0.50 per share and has a dividend yield of 1.8%. Sprouts Farmers Market does not pay a dividend. Kroger pays out 29.8% of its earnings in the form of a dividend. Sprouts Farmers Market has increased its dividend for 9 consecutive years.

Institutional & Insider Ownership

89.7% of Sprouts Farmers Market shares are owned by institutional investors. Comparatively, 79.6% of Kroger shares are owned by institutional investors. 2.6% of Sprouts Farmers Market shares are owned by company insiders. Comparatively, 0.9% of Kroger 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.

Analyst Recommendations

This is a summary of current ratings and target prices for Sprouts Farmers Market and Kroger, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sprouts Farmers Market 2 8 11 0 2.43
Kroger 0 13 11 0 2.46

Sprouts Farmers Market currently has a consensus target price of $24.31, suggesting a potential downside of 0.32%. Kroger has a consensus target price of $30.17, suggesting a potential upside of 8.65%. Given Kroger’s stronger consensus rating and higher probable upside, analysts plainly believe Kroger is more favorable than Sprouts Farmers Market.

Profitability

This table compares Sprouts Farmers Market and Kroger’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sprouts Farmers Market 3.01% 21.00% 9.02%
Kroger 1.31% 28.60% 4.94%

Sprouts Farmers Market Company Profile

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.

Kroger 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.

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