West Marine (NASDAQ: WMAR) and Tractor Supply (NASDAQ:TSCO) are both other specialty retailers – nec companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Dividends

West Marine pays an annual dividend of $0.20 per share and has a dividend yield of 1.5%. Tractor Supply pays an annual dividend of $1.08 per share and has a dividend yield of 1.7%. West Marine pays out 64.5% of its earnings in the form of a dividend. Tractor Supply pays out 32.0% 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. Tractor Supply is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for West Marine and Tractor Supply, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
West Marine 0 2 0 0 2.00
Tractor Supply 0 12 8 0 2.40

West Marine presently has a consensus target price of $10.49, indicating a potential downside of 19.16%. Tractor Supply has a consensus target price of $68.72, indicating a potential upside of 9.66%. Given Tractor Supply’s stronger consensus rating and higher possible upside, analysts clearly believe Tractor Supply is more favorable than West Marine.

Insider & Institutional Ownership

57.9% of West Marine shares are held by institutional investors. Comparatively, 93.0% of Tractor Supply shares are held by institutional investors. 27.5% of West Marine shares are held by insiders. Comparatively, 1.2% of Tractor Supply shares are held 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.

Earnings and Valuation

This table compares West Marine and Tractor Supply’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
West Marine N/A N/A N/A $0.31 41.84
Tractor Supply $6.78 billion 1.16 $437.12 million $3.37 18.60

Tractor Supply has higher revenue and earnings than West Marine. Tractor Supply is trading at a lower price-to-earnings ratio than West Marine, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares West Marine and Tractor Supply’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
West Marine 8.58% 27.26% 18.86%
Tractor Supply 6.04% 31.25% 15.32%

Summary

Tractor Supply beats West Marine on 9 of the 12 factors compared between the two stocks.

About West Marine

West Marine, Inc. is a waterlife outfitter for cruisers, sailors, anglers and paddlesports enthusiasts. The Company offers a selection of core boating and water recreation products, primarily serving the needs of boat owners and professionals providing services to them. It services its customers through physical stores and two e-commerce Websites. It is a specialty retailer of boating supplies, gear, apparel, footwear and other waterlife-related products. It operates approximately 260 stores located in approximately 40 states, Puerto Rico and Canada. Its products include boating products and merchandise expansion products. Its boating products include maintenance, electronics, sailboat hardware, anchors/docking/moorings, engine systems, boats/outboards, ventilation, navigation, trailering, seating/boat covers and barbecues/appliances. Its merchandise expansion products include clothing accessories, fishing, watersports, paddlesports, coolers and waterlife lifestyle accessories.

About Tractor Supply

Tractor Supply Company is an operator of rural lifestyle retail stores in the United States. The Company is focused on supplying the needs of recreational farmers and ranchers and others, as well as tradesmen and small businesses. It is engaged in the retail sale of products that support the rural lifestyle. The Company operates retail stores under the names Tractor Supply Company, Del’s Feed & Farm Supply and Petsense, and operates Websites under the names TractorSupply.com and Petsense.com. The Company’s selection of merchandise consists of various product categories, including equine, livestock, pet and small animal products; hardware, truck, towing and tool products; seasonal products, including heating, lawn and garden items, power equipment, gifts and toys; work/recreational clothing and footwear, and maintenance products for agricultural and rural use. Its brands include 4health, JobSmart, Bit & Bridle, Paws & Claws, Blue Mountain, Redstone, Dumor, Equistages and Royal Wing.

Receive News & Stock Ratings for West Marine Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for West Marine Inc. and related stocks with our FREE daily email newsletter.