Analyzing Ross Stores (NASDAQ:ROST) and Petco Health and Wellness (NASDAQ:WOOF)

Petco Health and Wellness (NASDAQ:WOOF) and Ross Stores (NASDAQ:ROST) are both consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, dividends, earnings and risk.

Valuation & Earnings

This table compares Petco Health and Wellness and Ross Stores”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Petco Health and Wellness	$5.96 billion	0.13	$9.07 million	$0.10	24.85
Ross Stores	$22.75 billion	3.17	$2.15 billion	$8.26	27.31

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

Volatility & Risk

Petco Health and Wellness has a beta of 1.53, indicating that its share price is 53% more volatile than the S&P 500. Comparatively, Ross Stores has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.

Insider and Institutional Ownership

86.9% of Ross Stores shares are held by institutional investors. 6.5% of Petco Health and Wellness shares are held by company insiders. Comparatively, 2.1% of Ross Stores shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Petco Health and Wellness and Ross Stores’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Petco Health and Wellness	0.51%	3.44%	0.78%
Ross Stores	10.85%	39.29%	15.79%

Analyst Ratings

This is a summary of recent recommendations and price targets for Petco Health and Wellness and Ross Stores, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Petco Health and Wellness	2	5	1	1	2.11
Ross Stores	0	6	15	0	2.71

Petco Health and Wellness currently has a consensus target price of $3.42, suggesting a potential upside of 37.63%. Ross Stores has a consensus target price of $263.76, suggesting a potential upside of 16.91%. Given Petco Health and Wellness’ higher probable upside, equities research analysts clearly believe Petco Health and Wellness is more favorable than Ross Stores.

Summary

Ross Stores beats Petco Health and Wellness on 11 of the 15 factors compared between the two stocks.

About Petco Health and Wellness

Petco Health and Wellness Company, Inc., operates as a health and wellness company, focuses on enhancing the lives of pets, pet parents, and its Petco partners in the United States, Mexico, and Puerto Rico. The company provides veterinary care, grooming, training, tele-health, and Vital Care and pet health insurance services, as well as veterinary services through Vetco mobile clinics. It also offers pet consumables, supplies, and services through its petco.com, petcoach.co, petinsurancequotes.com, and pupbox.com websites. The company offers its products under the WholeHearted, Reddy, and Well & Good brands. Petco Health and Wellness Company, Inc. was founded in 1965 and is headquartered in San Diego, California.

About Ross Stores

Ross Stores, Inc., together with its subsidiaries, operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd’s DISCOUNTS brand names in the United States. Its stores primarily offer apparel, accessories, footwear, and home fashions. The company’s Ross Dress for Less stores sell its products at department and specialty stores to middle income households; and dd’s DISCOUNTS stores sell its products at department and discount stores for households with moderate income. Ross Stores, Inc. was incorporated in 1957 and is headquartered in Dublin, California.