Reviewing Ingles Markets (IMKTA) and Sprouts Farmers Market (SFM)

Ingles Markets (NASDAQ: IMKTA) and Sprouts Farmers Market (NASDAQ:SFM) are both retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, valuation, analyst recommendations, earnings and risk.

Dividends

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Ingles Markets pays an annual dividend of $0.66 per share and has a dividend yield of 1.9%. Sprouts Farmers Market does not pay a dividend. Ingles Markets pays out 24.8% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Ingles Markets and Sprouts Farmers Market’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ingles Markets $4.00 billion 0.17 $53.87 million $2.66 12.76
Sprouts Farmers Market $4.66 billion 0.68 $158.44 million $1.01 23.49

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

Insider and Institutional Ownership

60.0% of Ingles Markets shares are held by institutional investors. Comparatively, 92.5% of Sprouts Farmers Market shares are held by institutional investors. 29.5% of Ingles Markets shares are held by insiders. Comparatively, 1.8% of Sprouts Farmers Market shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for Ingles Markets and Sprouts Farmers Market, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ingles Markets 0 0 0 0 N/A
Sprouts Farmers Market 1 7 12 0 2.55

Sprouts Farmers Market has a consensus price target of $27.13, suggesting a potential upside of 14.35%. Given Sprouts Farmers Market’s higher possible upside, analysts clearly believe Sprouts Farmers Market is more favorable than Ingles Markets.

Risk and Volatility

Ingles Markets has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500. Comparatively, Sprouts Farmers Market has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500.

Profitability

This table compares Ingles Markets and Sprouts Farmers Market’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ingles Markets 2.11% 16.66% 4.93%
Sprouts Farmers Market 3.40% 21.81% 9.07%

Summary

Sprouts Farmers Market beats Ingles Markets on 12 of the 15 factors compared between the two stocks.

About Ingles Markets

Ingles Markets, Incorporated operates a chain of supermarkets in the southeast United States. Its supermarkets offer various food products, including grocery, meat and dairy products, produce, frozen foods, and other perishables; and non-food products, such as fuel centers, pharmacies, health and beauty care products, and general merchandise, as well as private label items. The company also provides home meal replacement items, delicatessens, bakeries, floral departments, and greeting cards, as well as organic, beverage, and health-related items. As of September 30, 2017, it operated 190 supermarkets under the Ingles name; and 9 supermarkets under the Sav-Mor name in western North Carolina, western South Carolina, northern Georgia, eastern Tennessee, southwestern Virginia and northeastern Alabama, as well as 103 pharmacies and 97 fuel centers. In addition, it is involved in the fluid dairy operation and shopping center rental businesses. Ingles Markets, Incorporated was founded in 1963 and is headquartered in Black Mountain, North Carolina.

About Sprouts Farmers Market

Sprouts Farmers Market, Inc. is a food retailer. The Company operates as a grocery store that offers fresh, natural and organic food that includes fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, body care and natural household items catering to consumers’ interest in health and wellness. As of February 23, 2017, the Company operated 256 stores in 14 states. The Company categorizes the varieties of products it sells as perishable and non-perishable. The perishable product categories include produce, meat, seafood, deli and bakery. Its non-perishable product categories include grocery, vitamins and supplements, bulk items, dairy and dairy alternatives, frozen foods, beer and wine, and natural health and body care.

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