Smart (NYSE: SFS) and Wal-Mart Stores (NYSE:WMT) are both consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, earnings, analyst recommendations, institutional ownership and profitability.

Valuation and Earnings

This table compares Smart and Wal-Mart Stores’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Smart $4.44 billion 0.13 $136.62 million $0.12 65.42
Wal-Mart Stores $490.01 billion 0.48 $32.87 billion $4.16 18.78

Wal-Mart Stores has higher revenue and earnings than Smart. Wal-Mart Stores is trading at a lower price-to-earnings ratio than Smart, indicating that it is currently the more affordable of the two stocks.

Dividends

Wal-Mart Stores pays an annual dividend of $2.04 per share and has a dividend yield of 2.6%. Smart does not pay a dividend. Wal-Mart Stores pays out 49.0% of its earnings in the form of a dividend. Smart has increased its dividend for 42 consecutive years.

Insider and Institutional Ownership

30.2% of Wal-Mart Stores shares are owned by institutional investors. 8.5% of Smart shares are owned by insiders. Comparatively, 51.4% of Wal-Mart Stores shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Smart and Wal-Mart Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Smart 0.21% 4.14% 1.19%
Wal-Mart Stores 2.60% 16.87% 6.61%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Smart and Wal-Mart Stores, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Smart 1 4 4 0 2.33
Wal-Mart Stores 2 17 14 0 2.36

Smart presently has a consensus price target of $20.69, suggesting a potential upside of 163.54%. Wal-Mart Stores has a consensus price target of $80.79, suggesting a potential upside of 3.39%. Given Smart’s higher probable upside, equities research analysts clearly believe Smart is more favorable than Wal-Mart Stores.

Volatility and Risk

Smart has a beta of 0.31, meaning that its stock price is 69% less volatile than the S&P 500. Comparatively, Wal-Mart Stores has a beta of 0.3, meaning that its stock price is 70% less volatile than the S&P 500.

Summary

Wal-Mart Stores beats Smart on 12 of the 17 factors compared between the two stocks.

Smart Company Profile

Smart & Final Stores, Inc. is a food retailer. The Company is engaged in the business of selling fresh perishables and everyday grocery items, together with foodservice, packaging and janitorial products. The Company operates through two segments: Smart & Final, and Cash and Carry. The Smart & Final segment focuses on both household and business customers. Its Smart & Final stores offer various selections of fresh perishables and everyday grocery items, together with a focused selection of foodservice, packaging and janitorial products, under both national and private label brands. The Cash & Carry segment focuses primarily on restaurants, caterers and a range of other foodservice businesses. It operates non-membership warehouse-style grocery stores under the Smart & Final banner in California, Arizona, and Nevada. The Company also operates non-membership warehouse-style grocery stores in Washington, Oregon, California, Idaho, Utah, and Nevada under the Cash & Carry banner.

Wal-Mart Stores Company Profile

Wal-Mart Stores, Inc. is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company operates through three segments: Walmart U.S., Walmart International and Sam’s Club. The Walmart U.S. segment includes its mass merchant concept in the United States operating under the Walmart or Wal-Mart brands, as well as digital retail. The Walmart International segment consists of the Company’s operations outside of the United States, including various retail Websites. The Walmart International segment includes various formats divided into three categories: retail, wholesale and other. These categories consist of various formats, including supercenters, supermarkets, and warehouse clubs, such as Sam’s Clubs, cash and carry, home improvement, specialty electronics, apparel stores, drug stores and convenience stores, as well as digital retail. The Sam’s Club segment includes the warehouse membership clubs in the United States, and samsclub.com.

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