DAVIDsTEA (NASDAQ: DTEA) and Safeway (NYSE:SWY) are both consumer staples companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, analyst recommendations, dividends, earnings and risk.

Analyst Ratings

This is a breakdown of recent ratings and price targets for DAVIDsTEA and Safeway, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DAVIDsTEA 0 2 0 0 2.00
Safeway 0 0 0 0 N/A

DAVIDsTEA currently has a consensus price target of $6.00, indicating a potential upside of 55.84%. Given DAVIDsTEA’s higher probable upside, equities analysts clearly believe DAVIDsTEA is more favorable than Safeway.

Institutional & Insider Ownership

11.7% of DAVIDsTEA shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares DAVIDsTEA and Safeway’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DAVIDsTEA -4.79% N/A N/A
Safeway -0.26% -1.66% -0.69%

Risk and Volatility

DAVIDsTEA has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500. Comparatively, Safeway has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500.

Valuation & Earnings

This table compares DAVIDsTEA and Safeway’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
DAVIDsTEA $164.02 million 0.61 -$4.83 million ($0.31) -12.42
Safeway N/A N/A N/A $0.12 292.50

Safeway has lower revenue, but higher earnings than DAVIDsTEA. DAVIDsTEA is trading at a lower price-to-earnings ratio than Safeway, indicating that it is currently the more affordable of the two stocks.

Summary

DAVIDsTEA beats Safeway on 5 of the 8 factors compared between the two stocks.

DAVIDsTEA Company Profile

DAVIDsTEA Inc. is engaged in the retail and online sale of tea, tea accessories, and food and beverages in Canada and in the United States. The Company’s segments include Canada and the U.S. The Company is a branded retailer of specialty tea, offering approximately 150 loose-leaf teas, pre-packaged teas, tea sachets and tea-related gifts, accessories, and food and beverages primarily through approximately 190 DAVIDsTEA stores, which are operated by the Company, and its Website, davidstea.com. Additionally, the Company offers on-the-go tea beverages in its retail stores. The Company’s tea accessories include tea mugs, travel mugs, teacup sets, teapots, tea makers, kettles, infusers, filters, frothers, tins and spoons. The Company offers beverages range from the standard hot or iced tea to its Tea Lattes. The Company’s different flavors of loose-leaf tea span eight tea categories: white, green, oolong, black, pu’erh, mate, rooibos and herbal tea.

Safeway Company Profile

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.

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