Financial Survey: Metro (OTCMKTS:MTRAF) & Dollar General (NYSE:DG)

Metro (OTCMKTS:MTRAF) and Dollar General (NYSE:DG) are both large-cap consumer staples companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, risk, earnings, dividends, analyst recommendations, institutional ownership and valuation.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Metro and Dollar General, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Metro	0	1	3	0	2.75
Dollar General	1	16	12	0	2.38

Dollar General has a consensus price target of $137.96, suggesting a potential upside of 4.79%. Given Dollar General’s higher possible upside, analysts plainly believe Dollar General is more favorable than Metro.

Insider and Institutional Ownership

91.8% of Dollar General shares are owned by institutional investors. 0.6% of Dollar General shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Metro and Dollar General”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Metro	$15.74 billion	0.91	$727.05 million	$3.04	22.73
Dollar General	$42.72 billion	0.68	$1.51 billion	$7.69	17.12

Dollar General has higher revenue and earnings than Metro. Dollar General is trading at a lower price-to-earnings ratio than Metro, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Metro and Dollar General’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Metro	4.01%	14.24%	6.80%
Dollar General	3.90%	18.93%	5.21%

Dividends

Metro pays an annual dividend of $1.14 per share and has a dividend yield of 1.7%. Dollar General pays an annual dividend of $2.36 per share and has a dividend yield of 1.8%. Metro pays out 37.5% of its earnings in the form of a dividend. Dollar General pays out 30.7% 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. Dollar General is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Dollar General beats Metro on 10 of the 15 factors compared between the two stocks.

About Metro

Metro Inc., through its subsidiaries, operates as a retailer, franchisor, distributor, and manufacturer in the food and pharmaceutical sectors in Canada. The company operates supermarkets, discount, neighborhood, and specialty stores that provide fresh and grocery products, baked goods, prepared food products, meats, dairy products, fruits and vegetables, frozen food products, bakery products, delicatessen items, and pastries. It also manufactures ready-to-eat meals, salads, dips, pastries, pies, breads, and cakes; generic drugs under Pro Doc trademark; and provides online grocery shopping services. In addition, the company offers its private label food products under Irresistibles, Selection, Our Harvest Best, Lucky Koi, Life Smart, Adonis, Phoenicia, and Premiere Moisson brands; and private label drug products comprising beauty and cosmetic products, over-the-counter medications, and personal care products, sold under the Personnelle brand name. It operates a network of food stores under various banners, including Metro, Metro Plus, Adonis, Super C, Marché Richelieu, Marché Ami, Première Moisson, Les 5 Saisons, and Food Basics, as well as drugstores primarily under the PJC Jean Coutu, PJC Santé, PJC Santé Beauté, Brunet, Brunet Plus, Brunet Clinique, Clini Plus, Metro Pharmacy, and Food Basics Pharmacy banners. The company was founded in 1947 and is headquartered in Montréal, Canada.

About Dollar General

Dollar General Corporation, a discount retailer, provides various merchandise products in the southern, southwestern, midwestern, and eastern United States. It offers consumable products, including paper and cleaning products, such as paper towels, bath tissues, paper dinnerware, trash and storage bags, disinfectants, and laundry products; packaged food comprising cereals, pasta, canned soups, fruits and vegetables, condiments, spices, sugar, and flour; and perishables that include milk, eggs, bread, refrigerated and frozen food, beer, and wine. The company's consumable products also comprise snacks, such as candies, cookies, crackers, salty snacks, and carbonated beverages; health and beauty products, including over-the-counter medicines and personal care products, such as soaps, body washes, shampoos, cosmetics, and dental hygiene and foot care products; pet supplies and pet food; and tobacco products. In addition, it offers seasonal products comprising holiday items, toys, batteries, small electronics, greeting cards, stationery, prepaid phones and accessories, gardening supplies, hardware, and automotive and home office supplies; and home products that include kitchen supplies, cookware, small appliances, light bulbs, storage containers, frames, candles, craft supplies and kitchen, and bed and bath soft goods. Further, the company provides apparel, which comprise basic items for infants, toddlers, girls, boys, women, and men, as well as socks, underwear, disposable diapers, shoes, and accessories. The company was formerly known as J.L. Turner & Son, Inc. and changed its name to Dollar General Corporation in 1968. Dollar General Corporation was founded in 1939 and is based in Goodlettsville, Tennessee.