Is The Kroger Co. (KR) Superior to Costco Wholesale Corporation (COST) and Wal-Mart Stores, Inc. (WMT)?

The company is projected to grow its earnings by around 9.3% on average over the next five years. The growth in earnings also comes with a 2.5% dividend yield. The company isn’t very volatile in nature based on its 0.3 beta rating. It currently trades at a 14.8 earnings multiple, making it slightly more expensive than The Kroger Co. (NYSE:KR) and implying that Kroger has the potential to generate higher returns on investment than Wal-Mart Stores, Inc. (NYSE:WMT). Kroger is also a riskier investment, however.

Costco Wholesale Corporation (NASDAQ:COST) has been able to report fairly solid growth through its ultra-low-price membership-driven retail business. If you buy in bulk, this company will sell you products at the lowest price possible. It can be difficult to buy groceries in large quantities without it going to waste, however. Anyone who wants to save money on food will find the packaged goods and the frozen section their best friend, however.

The company is projected to grow its revenues by 6.9% for the full year. Comparatively, The Kroger Co. (NYSE:KR) is projected to grow sales by 2.6% for the full year. Costco Wholesale Corporation (NASDAQ:COST) is a faster-growing business than Wal-Mart Stores, Inc. (NYSE:WMT) and Kroger, but it also trades at an astounding 23.9 earnings multiple. Analysts on a consensus basis anticipate Costco Wholesale Corporation (NASDAQ:COST) to grow by 13.47% on average over the next five years. The company pays a 1.15% dividend yield.

Conclusion

I think that both The Kroger Co. (NYSE:KR) and Wal-Mart Stores, Inc. (NYSE:WMT) are better investments than Costco Wholesale Corporation (NASDAQ:COST). But investors who want to diversify should consider investing into all three companies. All three companies are likely to generate reasonable returns on investment.

Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale Corporation (NASDAQ:COST). The Motley Fool owns shares of Costco Wholesale.

The article Is Kroger Superior to Costco and Wal-Mart? originally appeared on Fool.com.

Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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