Costco Wholesale (NASDAQ:COST) versus Raia Drogasil (OTCMKTS:RADLY) Financial Contrast

Raia Drogasil (OTCMKTS:RADLY) and Costco Wholesale (NASDAQ:COST) are both consumer staples companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, risk, institutional ownership, earnings, profitability, valuation and analyst recommendations.

Profitability

This table compares Raia Drogasil and Costco Wholesale’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Raia Drogasil	2.99%	20.12%	5.88%
Costco Wholesale	3.04%	27.60%	10.63%

Institutional & Insider Ownership

68.5% of Costco Wholesale shares are owned by institutional investors. 0.1% of Costco Wholesale shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Raia Drogasil pays an annual dividend of $0.04 per share and has a dividend yield of 0.9%. Costco Wholesale pays an annual dividend of $5.88 per share and has a dividend yield of 0.6%. Raia Drogasil pays out 26.7% of its earnings in the form of a dividend. Costco Wholesale pays out 28.3% 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. Costco Wholesale has increased its dividend for 22 consecutive years. Raia Drogasil is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and price targets for Raia Drogasil and Costco Wholesale, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Raia Drogasil	0	1	1	0	2.50
Costco Wholesale	1	8	25	0	2.71

Raia Drogasil presently has a consensus price target of $5.20, suggesting a potential upside of 18.45%. Costco Wholesale has a consensus price target of $1,087.40, suggesting a potential upside of 9.33%. Given Raia Drogasil’s higher possible upside, analysts clearly believe Raia Drogasil is more favorable than Costco Wholesale.

Earnings & Valuation

This table compares Raia Drogasil and Costco Wholesale”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Raia Drogasil	$7.92 billion	0.73	$232.27 million	$0.15	29.27
Costco Wholesale	$303.15 billion	1.45	$9.23 billion	$20.76	47.91

Costco Wholesale has higher revenue and earnings than Raia Drogasil. Raia Drogasil is trading at a lower price-to-earnings ratio than Costco Wholesale, indicating that it is currently the more affordable of the two stocks.

Summary

Costco Wholesale beats Raia Drogasil on 13 of the 16 factors compared between the two stocks.

About Raia Drogasil

Raia Drogasil S.A. engages in the retail sale of medicines, perfumery, personal care and beauty products, cosmetics, dermocosmetics, and specialty medicines in Brazil. It also markets its goods through telesales and call centers in the states of São Paulo, Tocantins, and Pernambuco. The company was founded in 1905 and is headquartered in São Paulo, Brazil.

About Costco Wholesale

Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. The company offers branded and private-label products in a range of merchandise categories. It offers merchandise, such as sundries, dry groceries, candies, coolers, freezers, deli, liquor, and tobacco; appliances, electronics, health and beauty aids, hardware, garden and patio products, sporting goods, tires, toys and seasonal products, office supplies, automotive care products, postages, tickets, apparel, small appliances, furniture, domestics, housewares, special order kiosks, and jewelry; and meat, produce, service deli, and bakery products. The company also operates gasoline, pharmacies, optical, food courts, hearing-aid centers, and tire installation centers; and offers business delivery, travel, grocery, and various other services online. It also operates e-commerce websites. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.