It’s the end of the month and time for the monthly industry comparison. This month, January of 2011, I compared the top dividend paying companies in the Discount, Variety Store industry.
This group was comprised of Walmart, Target, Costco, and Family Dollar Stores. If you missed any of them, take a look at my analysis of each company.
*Unless otherwise stated, all growth rates and averages are based on a 10 year history
| Walmart (WMT) | Target (TGT) | Costco (COST) | Family Dollar (FDO) | |
|---|---|---|---|---|
| Revenue Growth | 8.57% | 6.51% | 9.28% | 8.76% |
| Avg. Gross Margin | 23.83% | 32.58% | 12.44% | 33.87% |
| Operating Margins | 5.83% | 7.51% | 2.72% | 6.74% |
| Net Margin | 3.4% | 4.27% | 1.75% | 4.25% |
| Dividend Growth | 18.11% | 13.03% | N/A | 10.6% |
| EPS Growth | 11.28% | 10.07% | 9.4% | 10.02% |
| FCF Growth | 29.4% | N/A | N/A | 69.90% |
| Payout Ratio | 29% | 20% | 26% | 23% |
| Cash Payout Ratio | 30.05% | 12.18% | 19.86% | 21.62% |
| Share BuyBacks | -3.57% | -4.65% | -1.67% | -5.7% |
| Current Ratio | 0.87 | 1.63 | 1.16 | 1.57 |
| Book Value | $18.81 | $20.33 | $24.56 | $10.41 |
| Total Debt / Equity | 0.52 | 0.75 | 0.20 | 0.18 |
| Avg. Return on Equity | 20.77% | 18.89% | 12.51% | 19.62% |
| Avg. Cash Return on Capital | 6.25% | 1.36% | 6.31% | 14.86% |
| 5 Year Avg. Low p/e | 14.01 | 12.39 | 17.05 | 11.79 |
| Current p/e (ttm) | 14.8 | 16.68 | 24.20 | 16.38 |
| Current p/e (forward) | 13.29 | 14.04 | 21.22 | 13.76 |
*FCF growth was N/A for Target and Costco because the initial value used in the calculation was negative.
Overall, I find Walmart to be the most attractive stock. Besides their stellar numbers and aggressive growth, they are the only company that encompasses a discount retailer AND warehouse club in one. If you were to buy Target, Costco, or Family Dollar, you are only buying a retailer OR warehouse club. Walmart is the best of both worlds.
With that said, I do find value in the other stocks, but at present I will only be adding position to Walmart.
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Full Disclosure: I do not own any FDO, TGT, or COST. I am long WMT. My Current Portfolio Holdings can be seen here
8 Comments
As a shareholder, Walmart all the way – as a shopper, I prefer Target! 🙂
I agree that Walmart is the most attractive on that list. It’s been on my watch list for a while.
I got Walmart in my port portfolio and I’m long. What would be your next pick after Walmart?
FDO?
My next pick would probably be Costco. They have strong growth internationally, and are planning on increasing their stores from 582 to 1000 over the next 10 years. I like that their warehouses have ancillary businesses, like food courts, gas stations, and pharmacies, which provide substantial income. And an over 87% membership renewal rate shows customers really love Costco. But I’ll wait for a better price.
Thank you for a great answer.