Safeway (NYSE: SWY) and Sprouts Farmers Market (NASDAQ:SFM) are both mid-cap non-cyclical consumer goods & services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, earnings, risk, profitability and valuation.
This is a breakdown of recent recommendations and price targets for Safeway and Sprouts Farmers Market, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sprouts Farmers Market||1||7||12||0||2.55|
Sprouts Farmers Market has a consensus target price of $27.13, indicating a potential upside of 10.67%. Given Sprouts Farmers Market’s higher possible upside, analysts plainly believe Sprouts Farmers Market is more favorable than Safeway.
Earnings & Valuation
This table compares Safeway and Sprouts Farmers Market’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Sprouts Farmers Market||$4.66 billion||0.70||$158.44 million||$1.14||21.50|
Sprouts Farmers Market has higher revenue and earnings than Safeway. Sprouts Farmers Market is trading at a lower price-to-earnings ratio than Safeway, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
92.3% of Sprouts Farmers Market shares are owned by institutional investors. 2.6% of Sprouts Farmers Market shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
This table compares Safeway and Sprouts Farmers Market’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sprouts Farmers Market||3.40%||21.81%||9.07%|
Risk and Volatility
Safeway has a beta of 1.09, meaning that its stock price is 9% more volatile than the S&P 500. Comparatively, Sprouts Farmers Market has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.
Sprouts Farmers Market beats Safeway on 9 of the 11 factors compared between the two stocks.
Safeway Inc., is an food and drug retail company. The Company owns and operates GroceryWorks.com Operating Company, LLC, an online grocery channel doing business under the names Safeway.com and Vons.com. Blackhawk, a majority-owned subsidiary of Safeway, is a prepaid payment network utilizing proprietary technology to offer gift cards, other prepaid products and payment services. Blackhawk’s payment network supports its three primary constituents: consumers who purchase the products and services Blackhawk offers, content providers who offer branded products that are redeemable for goods and services, and distribution partners who sell the products. Blackhawk’s product offerings include gift cards, prepaid telecom products and prepaid financial services products, including general purpose reloadable cards and Blackhawk’s reload network.
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.
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