Head to Head Review: Costco Wholesale (NASDAQ:COST) and Village Super Market (NASDAQ:VLGEA)

Village Super Market (NASDAQ:VLGEA) and Costco Wholesale (NASDAQ:COST) are both consumer staples companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.

Earnings & Valuation

This table compares Village Super Market and Costco Wholesale”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Village Super Market	$2.32 billion	0.29	$56.38 million	$3.68	12.37
Costco Wholesale	$303.15 billion	1.34	$9.23 billion	$20.76	44.07

Costco Wholesale has higher revenue and earnings than Village Super Market. Village Super Market is trading at a lower price-to-earnings ratio than Costco Wholesale, indicating that it is currently the more affordable of the two stocks.

Dividends

Village Super Market pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. Costco Wholesale pays an annual dividend of $5.88 per share and has a dividend yield of 0.6%. Village Super Market pays out 27.2% of its earnings in the form of a dividend. Costco Wholesale pays out 28.3% 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. Village Super Market is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Village Super Market and Costco Wholesale’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Village Super Market	2.27%	10.80%	5.40%
Costco Wholesale	3.04%	27.60%	10.63%

Risk & Volatility

Village Super Market has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500. Comparatively, Costco Wholesale has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Village Super Market and Costco Wholesale, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Village Super Market	0	0	1	0	3.00
Costco Wholesale	1	10	22	0	2.64

Costco Wholesale has a consensus target price of $1,046.27, indicating a potential upside of 14.35%. Given Costco Wholesale’s higher possible upside, analysts plainly believe Costco Wholesale is more favorable than Village Super Market.

Institutional and Insider Ownership

39.0% of Village Super Market shares are owned by institutional investors. Comparatively, 68.5% of Costco Wholesale shares are owned by institutional investors. 59.1% of Village Super Market shares are owned by company insiders. Comparatively, 0.1% of Costco Wholesale shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Costco Wholesale beats Village Super Market on 13 of the 17 factors compared between the two stocks.

About Village Super Market

Village Super Market, Inc. operates a chain of supermarkets in the United States. The company offers grocery, meat, produce, dairy, deli, seafood, prepared foods, and bakery and frozen foods. It also provides non-food products, including health and beauty care, general merchandise, liquor, and pharmacy products through retail and online stores. Village Super Market, Inc. was founded in 1937 and is based in Springfield, New Jersey.

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.