Critical Survey: Costco Wholesale (NASDAQ:COST) vs. Axfood AB (publ) (OTCMKTS:AXFOY)

Axfood AB (publ) (OTCMKTS:AXFOY) and Costco Wholesale (NASDAQ:COST) are both consumer staples companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, valuation, profitability and institutional ownership.

Profitability

This table compares Axfood AB (publ) and Costco Wholesale’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Axfood AB (publ)	N/A	N/A	N/A
Costco Wholesale	3.01%	28.04%	10.63%

Dividends

Axfood AB (publ) pays an annual dividend of $4.91 per share and has a dividend yield of 19.7%. Costco Wholesale pays an annual dividend of $5.88 per share and has a dividend yield of 0.6%. Axfood AB (publ) pays out 48.0% of its earnings in the form of a dividend. Costco Wholesale pays out 29.6% 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. Costco Wholesale has increased its dividend for 22 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Axfood AB (publ) and Costco Wholesale, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Axfood AB (publ)	0	0	0	0	0.00
Costco Wholesale	1	11	22	0	2.62

Costco Wholesale has a consensus price target of $1,059.53, suggesting a potential upside of 13.50%. Given Costco Wholesale’s stronger consensus rating and higher probable upside, analysts clearly believe Costco Wholesale is more favorable than Axfood AB (publ).

Insider & Institutional Ownership

68.5% of Costco Wholesale shares are owned by institutional investors. 0.1% of Costco Wholesale shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Axfood AB (publ) and Costco Wholesale”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Axfood AB (publ)	N/A	N/A	N/A	$10.22	2.44
Costco Wholesale	$275.24 billion	1.50	$8.10 billion	$19.88	46.96

Costco Wholesale has higher revenue and earnings than Axfood AB (publ). Axfood AB (publ) is trading at a lower price-to-earnings ratio than Costco Wholesale, indicating that it is currently the more affordable of the two stocks.

Summary

Costco Wholesale beats Axfood AB (publ) on 13 of the 14 factors compared between the two stocks.

About Axfood AB (publ)

Axfood AB (publ) engages in the food retail and wholesale businesses primarily in Sweden. It operates through four segments: Willys, Hemköp, Dagab, and Snabbgross. The company sells groceries through Willys, HANDLAR'N, Hemköp, and Eurocash store chains. It is also involved in the e-commerce business; and provision of private label products. In addition, it offers home delivery of meal kits under the Middagsfrid name, as well as operates Urban Deli, a combination of restaurant and market hall; Apohem, an online retail pharmacy; Matöppe, a personal grocery store and the retailer-owned mini-mart; Snabbgriss, a restaurant; and Tempo, a mini-mart format of retailer-owned stores. The company serves restaurants, fastfood operators, and cafés; and retailer-owned stores, mini-marts, and other convenience retailers. Axfood AB (publ) was founded in 1958 and is headquartered in Stockholm, Sweden. Axfood AB (publ) operates as a subsidiary of Axretail AB.

About Costco Wholesale

Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. The company offers branded and private-label products in a range of merchandise categories. It offers merchandise, such as sundries, dry groceries, candies, coolers, freezers, deli, liquor, and tobacco; appliances, electronics, health and beauty aids, hardware, garden and patio products, sporting goods, tires, toys and seasonal products, office supplies, automotive care products, postages, tickets, apparel, small appliances, furniture, domestics, housewares, special order kiosks, and jewelry; and meat, produce, service deli, and bakery products. The company also operates gasoline, pharmacies, optical, food courts, hearing-aid centers, and tire installation centers; and offers business delivery, travel, grocery, and various other services online. It also operates e-commerce websites. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.