Costco Wholesale (NASDAQ: COST) and Wal-mart de Mexico S A B de C V (OTCMKTS:WMMVY) are both large-cap retail/wholesale companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, institutional ownership and analyst recommendations.
Costco Wholesale pays an annual dividend of $2.00 per share and has a dividend yield of 1.1%. Wal-mart de Mexico S A B de C V pays an annual dividend of $0.21 per share and has a dividend yield of 0.8%. Costco Wholesale pays out 34.4% of its earnings in the form of a dividend. Wal-mart de Mexico S A B de C V pays out 25.6% 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. Costco Wholesale has increased its dividend for 14 consecutive years. Costco Wholesale is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Costco Wholesale has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500. Comparatively, Wal-mart de Mexico S A B de C V has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500.
Insider and Institutional Ownership
72.9% of Costco Wholesale shares are held by institutional investors. Comparatively, 0.1% of Wal-mart de Mexico S A B de C V shares are held by institutional investors. 0.7% of Costco Wholesale shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This is a breakdown of recent ratings for Costco Wholesale and Wal-mart de Mexico S A B de C V, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Wal-mart de Mexico S A B de C V||0||2||0||0||2.00|
Costco Wholesale currently has a consensus target price of $190.86, indicating a potential upside of 3.75%. Given Costco Wholesale’s stronger consensus rating and higher possible upside, equities analysts plainly believe Costco Wholesale is more favorable than Wal-mart de Mexico S A B de C V.
This table compares Costco Wholesale and Wal-mart de Mexico S A B de C V’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Wal-mart de Mexico S A B de C V||7.10%||22.23%||11.76%|
Earnings & Valuation
This table compares Costco Wholesale and Wal-mart de Mexico S A B de C V’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Costco Wholesale||$129.03 billion||0.63||$2.68 billion||$5.82||31.61|
|Wal-mart de Mexico S A B de C V||$26.84 billion||1.74||$1.79 billion||$0.82||32.66|
Costco Wholesale has higher revenue and earnings than Wal-mart de Mexico S A B de C V. Costco Wholesale is trading at a lower price-to-earnings ratio than Wal-mart de Mexico S A B de C V, indicating that it is currently the more affordable of the two stocks.
Costco Wholesale beats Wal-mart de Mexico S A B de C V on 12 of the 17 factors compared between the two stocks.
About Costco Wholesale
Costco Wholesale Corporation is engaged in the operation of membership warehouses in the United States and Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Australia, Spain, and through its subsidiaries in Taiwan and Korea. As of August 28, 2016, the Company operated 715 warehouses across the world. The Company’s average warehouse space is approximately 144,000 square feet. The Company’s warehouses on average operate on a seven-day, 70-hour week. The Company offers merchandise in various categories, which include foods (including dry foods, packaged foods and groceries); sundries (including snack foods, candy, alcoholic and nonalcoholic beverages, and cleaning supplies); hardlines (including appliances, electronics, health and beauty aids, hardware, and garden and patio); fresh foods (including meat, produce, deli and bakery); softlines (including apparel and small appliances), and other (including gas stations and pharmacy).
About Wal-mart de Mexico S A B de C V
Wal Mart de Mexico SAB de CV is a Mexico-based company engaged in operating self-service stores. The Company’s segments include Mexico and Central America. In Mexico, the Company operates through Self-service, which includes the operation of discount stores, hypermarkets, wholesale-price membership stores and supermarkets, and Others, which includes department stores and real estate transactions with third parties. In Central America, it operates discount stores, supermarkets, hypermarkets, warehouse stores and wholesale-price membership stores in Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador. It offers products in a range of categories, such as food, consumables, general merchandise and apparel. It offers products under various brand names, including Bodega Aurrera Express, Walmart, Sam’s Club, Superama, Suburbia and Medimart Pharmacies. The Company also operates e-commerce business in Mexico. It is controlled by Wal Mart Stores Inc.
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