Critical Survey: Weis Markets (WMK) and Safeway (NYSE:SWY)

Weis Markets (NYSE: WMK) and Safeway (NYSE:SWY) are both retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, earnings, dividends, analyst recommendations, institutional ownership, risk and valuation.

Dividends

Weis Markets pays an annual dividend of $1.20 per share and has a dividend yield of 2.9%. Safeway does not pay a dividend. Weis Markets pays out 42.7% of its earnings in the form of a dividend. Weis Markets has raised its dividend for 12 consecutive years.

Earnings and Valuation

This table compares Weis Markets and Safeway’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Weis Markets $3.14 billion 0.35 $87.16 million $2.81 14.73
Safeway N/A N/A N/A $0.12 292.50

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

Profitability

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

Net Margins Return on Equity Return on Assets
Weis Markets 2.16% 8.13% 5.39%
Safeway -0.26% -1.66% -0.69%

Risk & Volatility

Weis Markets has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500. Comparatively, Safeway has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Weis Markets and Safeway, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Weis Markets 0 0 0 0 N/A
Safeway 0 0 0 0 N/A

Insider and Institutional Ownership

31.9% of Weis Markets shares are owned by institutional investors. 26.9% of Weis Markets shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Weis Markets beats Safeway on 9 of the 12 factors compared between the two stocks.

About Weis Markets

Weis Markets, Inc. is engaged principally in the retail sale of food in Pennsylvania and surrounding states. The Company’s retail food stores sell groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services, deli products, prepared foods, bakery products, beer and wine, fuel and general merchandise items, such as health and beauty care and household products. As of December 31, 2016, it had owned and operated approximately 204 retail food stores. The majority of the Company’s stores are concentrated in central and northeast Pennsylvania, central Maryland, suburban Washington, District of Columbia and Baltimore regions and New York’s Southern Tier. As of December 31, 2016, it had operated four stores in Delaware, 50 stores in Maryland, five stores in New Jersey, nine stores in New York, 121 stores in Pennsylvania, 13 stores in Virginia and two stores in West Virginia, for a total of 204 retail food stores operating under the Weis Markets name.

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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