Head-To-Head Survey: Costco Wholesale (NASDAQ:COST) vs. Kroger (NYSE:KR)

Kroger (NYSE:KR) and Costco Wholesale (NASDAQ:COST) are both large-cap consumer staples companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, earnings, risk, profitability, valuation and institutional ownership.

Institutional & Insider Ownership

80.9% of Kroger shares are held by institutional investors. Comparatively, 68.5% of Costco Wholesale shares are held by institutional investors. 0.4% of Kroger shares are held by company insiders. Comparatively, 0.1% of Costco Wholesale shares are held by company 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Kroger	0.71%	44.33%	6.20%
Costco Wholesale	3.01%	28.04%	10.63%

Earnings & Valuation

This table compares Kroger and Costco Wholesale”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kroger	$147.64 billion	0.24	$1.02 billion	$1.70	34.01
Costco Wholesale	$275.24 billion	1.53	$8.10 billion	$19.88	47.88

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Kroger and Costco Wholesale, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kroger	0	9	10	0	2.53
Costco Wholesale	1	12	22	0	2.60

Kroger presently has a consensus target price of $72.00, suggesting a potential upside of 24.52%. Costco Wholesale has a consensus target price of $1,059.07, suggesting a potential upside of 11.26%. Given Kroger’s higher probable upside, equities analysts plainly believe Kroger is more favorable than Costco Wholesale.

Dividends

Kroger pays an annual dividend of $1.40 per share and has a dividend yield of 2.4%. Costco Wholesale pays an annual dividend of $5.88 per share and has a dividend yield of 0.6%. Kroger pays out 82.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Costco Wholesale pays out 29.6% of its earnings in the form of a dividend. Kroger has raised its dividend for 19 consecutive years and Costco Wholesale has raised its dividend for 22 consecutive years.

Risk and Volatility

Kroger has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500. Comparatively, Costco Wholesale has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500.

Summary

Costco Wholesale beats Kroger on 12 of the 17 factors compared between the two stocks.

About Kroger

The Kroger Co. operates as a food and drug retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce; and multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys. The company’s marketplace stores offer full-service grocery, pharmacy, health and beauty care, and perishable goods, as well as general merchandise, including apparel, home goods, and toys; and price impact warehouse stores provide grocery, and health and beauty care items, as well as meat, dairy, baked goods, and fresh produce items. It also manufactures and processes food products for sale in its supermarkets and online; and sells fuel through fuel centers. The Kroger Co. was founded in 1883 and is based in Cincinnati, Ohio.

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.