West Marine (NASDAQ: WMAR) and Staples (NASDAQ:SPLS) are both consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, valuation, dividends and analyst recommendations.
Valuation and Earnings
This table compares West Marine and Staples’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|West Marine||$697.67 million||0.47||$39.13 million||$0.31||41.82|
|Staples||$17.91 billion||0.38||$1.22 billion||($2.35)||-4.36|
Staples has higher revenue and earnings than West Marine. Staples is trading at a lower price-to-earnings ratio than West Marine, indicating that it is currently the more affordable of the two stocks.
This table compares West Marine and Staples’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of recent ratings and price targets for West Marine and Staples, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
West Marine currently has a consensus target price of $10.49, indicating a potential downside of 19.13%. Staples has a consensus target price of $8.85, indicating a potential downside of 13.66%. Given Staples’ stronger consensus rating and higher probable upside, analysts clearly believe Staples is more favorable than West Marine.
Volatility and Risk
West Marine has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500. Comparatively, Staples has a beta of 1.74, meaning that its stock price is 74% more volatile than the S&P 500.
Insider and Institutional Ownership
57.9% of West Marine shares are held by institutional investors. Comparatively, 85.6% of Staples shares are held by institutional investors. 27.5% of West Marine shares are held by company insiders. Comparatively, 0.7% of Staples shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
West Marine pays an annual dividend of $0.20 per share and has a dividend yield of 1.5%. Staples pays an annual dividend of $0.48 per share and has a dividend yield of 4.7%. West Marine pays out 64.5% of its earnings in the form of a dividend. Staples pays out -20.4% 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. Staples is clearly the better dividend stock, given its higher yield and lower payout ratio.
Staples beats West Marine on 11 of the 15 factors compared between the two stocks.
West Marine Company Profile
West Marine, Inc. is a waterlife outfitter for cruisers, sailors, anglers and paddlesports enthusiasts. The Company offers a selection of core boating and water recreation products, primarily serving the needs of boat owners and professionals providing services to them. It services its customers through physical stores and two e-commerce Websites. It is a specialty retailer of boating supplies, gear, apparel, footwear and other waterlife-related products. It operates approximately 260 stores located in approximately 40 states, Puerto Rico and Canada. Its products include boating products and merchandise expansion products. Its boating products include maintenance, electronics, sailboat hardware, anchors/docking/moorings, engine systems, boats/outboards, ventilation, navigation, trailering, seating/boat covers and barbecues/appliances. Its merchandise expansion products include clothing accessories, fishing, watersports, paddlesports, coolers and waterlife lifestyle accessories.
Staples Company Profile
Staples, Inc. (Staples) is a provider of products and services that serve the needs of business customers and consumers. The Company offers a range of print and marketing and technology services. The Company’s segments include North American Delivery, North American Retail and Other. The North American Delivery segment consists of the United States and Canadian businesses, including Staples Business Advantage, staples.com, staples.ca, and quill.com, that sell and deliver products and services primarily to businesses. The North American Retail segment includes its retail stores in the United States and Canada. As of January 28, 2017, its North American Retail segment consisted of 1,255 stores in the United States and 304 stores in Canada. The Company has other businesses in Australia, South America and Asia. Staples Australia serves primarily contract and government customers in Australia and New Zealand. The Company also has operations in China, Argentina, Taiwan and Brazil.
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