Critical Analysis: Dollar Tree (NASDAQ:DLTR) vs. Albertsons Companies (NYSE:ACI)

Dollar Tree (NASDAQ:DLTR) and Albertsons Companies (NYSE:ACI) are both consumer staples companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, earnings, valuation, analyst recommendations, institutional ownership and profitability.

Institutional & Insider Ownership

97.4% of Dollar Tree shares are held by institutional investors. Comparatively, 71.3% of Albertsons Companies shares are held by institutional investors. 7.1% of Dollar Tree shares are held by insiders. Comparatively, 1.2% of Albertsons Companies shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Dollar Tree and Albertsons Companies”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dollar Tree	$19.41 billion	1.26	$1.28 billion	$6.40	19.88
Albertsons Companies	$83.17 billion	0.07	$217.40 million	$0.08	144.50

Dollar Tree has higher earnings, but lower revenue than Albertsons Companies. Dollar Tree is trading at a lower price-to-earnings ratio than Albertsons Companies, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for Dollar Tree and Albertsons Companies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dollar Tree	4	12	10	0	2.23
Albertsons Companies	4	8	5	0	2.06

Dollar Tree presently has a consensus price target of $122.82, suggesting a potential downside of 3.45%. Albertsons Companies has a consensus price target of $15.31, suggesting a potential upside of 32.42%. Given Albertsons Companies’ higher probable upside, analysts plainly believe Albertsons Companies is more favorable than Dollar Tree.

Volatility & Risk

Dollar Tree has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500. Comparatively, Albertsons Companies has a beta of 0.42, indicating that its stock price is 58% less volatile than the S&P 500.

Profitability

This table compares Dollar Tree and Albertsons Companies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dollar Tree	6.51%	35.19%	9.28%
Albertsons Companies	0.08%	45.59%	3.83%

Summary

Dollar Tree beats Albertsons Companies on 10 of the 14 factors compared between the two stocks.

About Dollar Tree

Dollar Tree, Inc. operates retail discount stores. The company operates in two segments, Dollar Tree and Family Dollar. The Dollar Tree segment offers merchandise at the fixed price of $ 1.25. It provides consumable merchandise, which includes everyday consumables, such as household paper and chemicals, food, candy, health, personal care products, and frozen and refrigerated food; variety merchandise comprising toys, durable housewares, gifts, stationery, party goods, greeting cards, softlines, arts and crafts supplies, and other items; and seasonal goods that include Christmas, Easter, Halloween, and Valentine's Day merchandise. It operates stores under the Dollar Tree and Dollar Tree Canada brands, as well as distribution centers in the United States and Canada. The Family Dollar segment operates general merchandise retail discount stores that offer consumable merchandise, which comprise food and beverages, tobacco, health and personal care, household chemicals, paper products, hardware and automotive supplies, diapers, batteries, and pet food and supplies; and home products, including housewares, home décor, and giftware, as well as domestics, such as comforters, sheets, and towels. It also provides apparel and accessories merchandise comprising clothing, fashion accessories, and shoes; and seasonal and electronics merchandise that include Christmas, Easter, Halloween, and Valentine's Day merchandise, as well as personal electronics, which comprise pre-paid cellular phones and services, stationery and school supplies, and toys. Dollar Tree, Inc. was founded in 1986 and is based in Chesapeake, Virginia.

About Albertsons Companies

Albertsons Companies, Inc., through its subsidiaries, engages in the operation of food and drug stores in the United States. The company’s food and drug retail stores offer grocery products, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. It also manufactures and processes food products for sale in stores. It operates stores under various banners, including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw’s, Star Market, United Supermarkets, Market Street, Haggen, Kings Food Markets, and Balducci’s Food Lovers Market; and pharmacies, in-store branded coffee shops, adjacent fuel centers, distribution centers, and manufacturing facilities, as well as various digital platforms. Albertsons Companies, Inc. was founded in 1860 and is headquartered in Boise, Idaho. Albertsons Companies, Inc. operates as a subsidiary of Albertsons Investor Holdings LLC.