Critical Review: Costco Wholesale Corporation (COST) and Burlington Stores (BURL)
Costco Wholesale Corporation (NASDAQ: COST) and Burlington Stores (NYSE:BURL) are both mid-cap retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, institutional ownership, risk, profitability, valuation and analyst recommendations.
This is a breakdown of current recommendations for Costco Wholesale Corporation and Burlington Stores, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Costco Wholesale Corporation||0||8||19||0||2.70|
Costco Wholesale Corporation currently has a consensus price target of $178.83, suggesting a potential upside of 10.18%. Burlington Stores has a consensus price target of $105.38, suggesting a potential upside of 16.93%. Given Burlington Stores’ stronger consensus rating and higher possible upside, analysts clearly believe Burlington Stores is more favorable than Costco Wholesale Corporation.
Risk and Volatility
Costco Wholesale Corporation has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, Burlington Stores has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500.
Insider & Institutional Ownership
72.5% of Costco Wholesale Corporation shares are held by institutional investors. 0.7% of Costco Wholesale Corporation shares are held by company insiders. Comparatively, 2.6% of Burlington Stores shares are held by company 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.
Earnings & Valuation
This table compares Costco Wholesale Corporation and Burlington Stores’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Costco Wholesale Corporation||$123.28 billion||0.58||$5.19 billion||$5.77||28.13|
|Burlington Stores||$5.75 billion||1.07||$599.05 million||$3.61||24.97|
Costco Wholesale Corporation has higher revenue and earnings than Burlington Stores. Burlington Stores is trading at a lower price-to-earnings ratio than Costco Wholesale Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares Costco Wholesale Corporation and Burlington Stores’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Costco Wholesale Corporation||2.06%||20.45%||6.88%|
Costco Wholesale Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 1.2%. Burlington Stores does not pay a dividend. Costco Wholesale Corporation pays out 34.7% of its earnings in the form of a dividend. Costco Wholesale Corporation has raised its dividend for 13 consecutive years.
Costco Wholesale Corporation beats Burlington Stores on 10 of the 17 factors compared between the two stocks.
About Costco Wholesale Corporation
Costco Wholesale Corporation is engaged in the operation of membership warehouses in the United States and Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Australia, Spain, and through its subsidiaries in Taiwan and Korea. As of August 28, 2016, the Company operated 715 warehouses across the world. The Company’s average warehouse space is approximately 144,000 square feet. The Company’s warehouses on average operate on a seven-day, 70-hour week. The Company offers merchandise in various categories, which include foods (including dry foods, packaged foods and groceries); sundries (including snack foods, candy, alcoholic and nonalcoholic beverages, and cleaning supplies); hardlines (including appliances, electronics, health and beauty aids, hardware, and garden and patio); fresh foods (including meat, produce, deli and bakery); softlines (including apparel and small appliances), and other (including gas stations and pharmacy).
About Burlington Stores
Burlington Stores, Inc. is a retailer of branded apparel. As of January 28, 2017, the Company operated 592 retail stores, inclusive of an Internet store, in 45 states and Puerto Rico. Its product categories include coats, women, men, juniors, girls, boys, shoes, handbags and accessories, beauty and fragrance, home and toys. The product categories for coats include women’s coats and jackets, men’s coats and jackets, juniors coats and jackets, girls coats and jackets, boy’s coats and jackets, baby girl coats and jackets, and baby boy coats and jackets. The product categories for women include active wear, bottoms, coats and jackets, dresses, tops, scrubs, suit and suit separates, sweaters, swimwear and cover-ups. It also includes accessories, beauty and fragrance, handbags, jewelry, shoes and watches. The product categories for men include accessories, active wear, casual button down shirts, dress shirts, men’s coats jackets, fleece, graphic tees, hoodies and sweatshirts, and jeans.
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