Contrasting PriceSmart (NASDAQ:PSMT) and Walmart (NASDAQ:WMT)

PriceSmart (NASDAQ:PSMT) and Walmart (NASDAQ:WMT) are both consumer staples companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, profitability, risk, valuation and earnings.

Risk & Volatility

PriceSmart has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500. Comparatively, Walmart has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.

Dividends

PriceSmart pays an annual dividend of $1.40 per share and has a dividend yield of 0.8%. Walmart pays an annual dividend of $0.99 per share and has a dividend yield of 0.8%. PriceSmart pays out 25.9% of its earnings in the form of a dividend. Walmart pays out 35.7% 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. PriceSmart has raised its dividend for 4 consecutive years and Walmart has raised its dividend for 53 consecutive years. PriceSmart is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares PriceSmart and Walmart’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PriceSmart	2.83%	12.15%	6.70%
Walmart	3.00%	21.83%	7.80%

Earnings & Valuation

This table compares PriceSmart and Walmart”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PriceSmart	$5.88 billion	0.88	$147.89 million	$5.40	30.88
Walmart	$735.84 billion	1.38	$21.89 billion	$2.77	46.10

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for PriceSmart and Walmart, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PriceSmart	0	0	2	0	3.00
Walmart	0	3	32	4	3.03

PriceSmart presently has a consensus price target of $198.00, indicating a potential upside of 18.73%. Walmart has a consensus price target of $132.41, indicating a potential upside of 3.70%. Given PriceSmart’s higher probable upside, equities analysts plainly believe PriceSmart is more favorable than Walmart.

Institutional & Insider Ownership

80.5% of PriceSmart shares are held by institutional investors. Comparatively, 26.8% of Walmart shares are held by institutional investors. 17.0% of PriceSmart shares are held by company insiders. Comparatively, 0.1% of Walmart shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Walmart beats PriceSmart on 11 of the 18 factors compared between the two stocks.

About PriceSmart

PriceSmart, Inc. owns and operates U.S.-style membership shopping warehouse clubs in the United States, Central America, the Caribbean, and Colombia. The company provides basic and private label consumer products under the Member's Selection brand, including groceries, cleaning supplies, health and beauty aids, meat, produce, deli, seafood, and poultry. It offers electronics, large and small appliances, automotive, hardware, sporting goods, seasonal products, clothing, domestics, and home furnishing products. In addition, the company offers food and bakery services, as well as health services, such as optical, audiology, and pharmacy. Further, it operates an e-commerce platform for online ordering, curbside pickup, and delivery services. PriceSmart, Inc. was incorporated in 1994 and is headquartered in San Diego, California.

About Walmart

Walmart Inc. engages in the operation of retail, wholesale, other units, and eCommerce worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam's Club. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, and discount stores under Walmart and Walmart Neighborhood Market brands; membership-only warehouse clubs; ecommerce websites, such as walmart.com.mx, walmart.ca, flipkart.com, PhonePe and other sites; and mobile commerce applications. The company offers grocery and consumables, including dairy, meat, bakery, deli, produce, dry, chilled or frozen packaged foods, alcoholic and nonalcoholic beverages, floral, snack foods, candy, other grocery items, health and beauty aids, paper goods, laundry and home care, baby care, pet supplies, and other consumable items; fuel, tobacco and other categories. It is also involved in the provision of health and wellness products covering pharmacy, optical and hearing services, and over-the-counter drugs and other medical products; and home and apparel including home improvement, outdoor living, gardening, furniture, apparel, jewelry, tools and power equipment, housewares, toys, seasonal items, mattresses and tire and battery centers. In addition, the company offers consumer electronics and accessories, software, video games, office supplies, appliances, and third-party gift cards. Further, it operates digital payment platforms; and offers financial services and related products, including money transfers, bill payments, money orders, check cashing, prepaid access, co-branded credit cards, installment lending, and earned wage access. Additionally, the company markets lines of merchandise under private brands, including Allswell, Athletic Works, Equate, and Free Assembly. The company was formerly known as Wal-Mart Stores, Inc. and changed its name to Walmart Inc. in February 2018. Walmart Inc. was founded in 1945 and is based in Bentonville, Arkansas.