SuperValu (NYSE: SVU) and Sysco Corporation (NYSE:SYY) are both consumer staples companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Profitability

This table compares SuperValu and Sysco Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SuperValu 4.46% 220.54% 2.55%
Sysco Corporation 2.06% 53.25% 7.62%

Insider & Institutional Ownership

78.9% of Sysco Corporation shares are owned by institutional investors. 1.7% of SuperValu shares are owned by insiders. Comparatively, 8.8% of Sysco Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for SuperValu and Sysco Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SuperValu 0 4 2 0 2.33
Sysco Corporation 0 7 6 0 2.46

SuperValu currently has a consensus target price of $33.60, indicating a potential upside of 70.91%. Sysco Corporation has a consensus target price of $56.09, indicating a potential upside of 5.99%. Given SuperValu’s higher probable upside, analysts clearly believe SuperValu is more favorable than Sysco Corporation.

Earnings & Valuation

This table compares SuperValu and Sysco Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
SuperValu $12.72 billion 0.06 $461.00 million $16.03 1.23
Sysco Corporation $55.37 billion 0.51 $3.14 billion $2.09 25.32

Sysco Corporation has higher revenue and earnings than SuperValu. SuperValu is trading at a lower price-to-earnings ratio than Sysco Corporation, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

SuperValu has a beta of 2.11, suggesting that its stock price is 111% more volatile than the S&P 500. Comparatively, Sysco Corporation has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500.

Dividends

Sysco Corporation pays an annual dividend of $1.32 per share and has a dividend yield of 2.5%. SuperValu does not pay a dividend. Sysco Corporation pays out 63.2% of its earnings in the form of a dividend. Sysco Corporation has increased its dividend for 46 consecutive years.

Summary

Sysco Corporation beats SuperValu on 11 of the 17 factors compared between the two stocks.

About SuperValu

Supervalu Inc. is a wholesale distributor to independent retail customers across the United States. The Company’s segments include Wholesale and Retail. The Company offers a range of advertised brand name and private-label products, including grocery (both perishable and nonperishable), general merchandise and home, health and beauty care, and pharmacy, which are sold through Company-operated and licensed Retail stores to shoppers and through its Wholesale segment to independent retail customers. The Company’s Wholesale segment provides wholesale distribution of products to independent retail customers. Wholesale is organized and operated through two geographic regions: East and West. As of February 27, 2016, the Company conducted its Retail operations through a total of 200 stores primarily organized under five regionally-based retail banners of Cub Foods, Shoppers Food & Pharmacy, Shop ‘n Save, Farm Fresh and Hornbacher’s, as well as two Rainbow and two County Market stores.

About Sysco Corporation

Sysco Corporation (Sysco) is a distributor of food and related products primarily to the foodservice or food-away-from-home industry. The Company’s segments include Broadline, SYGMA and Other. The Broadline segment includes its Broadline operations located in the Bahamas, Canada, Costa Rica, Ireland, Mexico and the United States. Broadline operating companies distribute a full line of food products and a range of non-food products to both traditional and chain restaurant customers, hospitals, schools, hotels, industrial caterers and other venues where foodservice products are served. SYGMA operating companies distribute a full line of food products and a range of non-food products to certain chain restaurant customer locations. The Other segment includes the Company’s specialty produce; custom-cut meat operations; lodging industry segments; a company that distributes specialty imported products; a company that distributes to international customers, and Sysco Ventures platform.

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