Comparing Safeway (SWY) and SYSCO (SYY)

SYSCO (NYSE: SYY) and Safeway (NYSE:SWY) are both mid-cap consumer staples companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, risk, valuation, earnings, analyst recommendations, profitability and dividends.

Institutional and Insider Ownership

80.1% of SYSCO shares are owned by institutional investors. 9.6% of SYSCO shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares SYSCO and Safeway’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SYSCO $55.37 billion 0.59 $1.14 billion $2.20 28.73
Safeway N/A N/A N/A $0.12 292.50

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

Analyst Ratings

This is a summary of current ratings and target prices for SYSCO and Safeway, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SYSCO 0 6 7 0 2.54
Safeway 0 0 0 0 N/A

SYSCO currently has a consensus price target of $58.91, indicating a potential downside of 6.80%. Given SYSCO’s higher probable upside, equities analysts clearly believe SYSCO is more favorable than Safeway.

Volatility & Risk

SYSCO has a beta of 0.53, meaning that its stock price is 47% less volatile than the S&P 500. Comparatively, Safeway has a beta of 1.09, meaning that its stock price is 9% more volatile than the S&P 500.

Profitability

This table compares SYSCO and Safeway’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SYSCO 2.12% 58.47% 7.68%
Safeway -0.26% -1.66% -0.69%

Dividends

SYSCO pays an annual dividend of $1.44 per share and has a dividend yield of 2.3%. Safeway does not pay a dividend. SYSCO pays out 65.5% of its earnings in the form of a dividend. Safeway has increased its dividend for 47 consecutive years.

Summary

SYSCO beats Safeway on 10 of the 14 factors compared between the two stocks.

About SYSCO

Sysco Corporation (Sysco) is a distributor of food and related products primarily to the foodservice or food-away-from-home industry. The Company’s segments include Broadline, SYGMA and Other. The Broadline segment includes its Broadline operations located in the Bahamas, Canada, Costa Rica, Ireland, Mexico and the United States. Broadline operating companies distribute a full line of food products and a range of non-food products to both traditional and chain restaurant customers, hospitals, schools, hotels, industrial caterers and other venues where foodservice products are served. SYGMA operating companies distribute a full line of food products and a range of non-food products to certain chain restaurant customer locations. The Other segment includes the Company’s specialty produce; custom-cut meat operations; lodging industry segments; a company that distributes specialty imported products; a company that distributes to international customers, and Sysco Ventures platform.

About Safeway

Safeway Inc., is an food and drug retail company. The Company owns and operates GroceryWorks.com Operating Company, LLC, an online grocery channel doing business under the names Safeway.com and Vons.com. Blackhawk, a majority-owned subsidiary of Safeway, is a prepaid payment network utilizing proprietary technology to offer gift cards, other prepaid products and payment services. Blackhawk’s payment network supports its three primary constituents: consumers who purchase the products and services Blackhawk offers, content providers who offer branded products that are redeemable for goods and services, and distribution partners who sell the products. Blackhawk’s product offerings include gift cards, prepaid telecom products and prepaid financial services products, including general purpose reloadable cards and Blackhawk’s reload network.

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