Which grocery company is the most attractive to investors? Wal-Mart Stores, Inc. (NYSE:WMT) and Costco Wholesale Corporation (NASDAQ:COST) are the first major grocery stores that come to mind. But are the most popular companies always the best investment? The Kroger Co. (NYSE:KR), Safeway Inc. (NYSE:SWY), and Whole Foods Market, Inc. (NASDAQ:WFM) offer alternative investment options in the grocery stores industry.
| Market Cap | 2012 Revenue | 2012 Net Income | |
|---|---|---|---|
| Kroger | $16.38 billion | $90.3 billion | $602 million |
| Safeway | $5.99 billion | $44.2 billion | $596 million |
| Whole Foods | $15.99 billion | $11.6 billion | $465 million |
The Kroger Company
The Kroger Co. (NYSE:KR) operates 3,226 supermarkets and convenience stores in the United States. In addition to being a retailer of grocery foods, it has its own private brand label for sale in its stores. It is the largest of these three stores with the highest market cap, revenue in 2012, and net income. It also owns 348 fine jewelry stores in the United States.
In the most recent quarter, The Kroger Co. (NYSE:KR)’s revenue grew by 13%. It has made major efforts in increasing customer experience with its customer rewards program. This has attracted more returning and new customers to its stores. Next quarter, the company should be able to continue this growth with an expected increase in earnings.
Safeway
Like Kroger, Safeway owns and operates grocery stores and carries its own private label brand. As of December 2012, it had 1,641 stores in North America. Its popular private label brands are Lucerne, Safeway Select, and Pantry Essentials. This company also profited from a loyalty and rewards program. 45% of its revenue in the most recent quarter came from customers who were enrolled in the loyalty program.
Whole Foods Market
Whole Foods Market, Inc. (NASDAQ:WFM) differs from these two companies in that it focuses on a niche market — organic and natural foods. Also, it operates stores outside of the United States in Canada and the United Kingdom. As of February 2013, the company owned and operated 340 stores. It has considerably fewer stores than the other companies, and its revenue reflects the difference.
Its focus on organic and natural foods makes it a part of a large growing trend. Its prices are noticeably higher than its competitors, but this has not pushed away any customers.
Financial overview
The last five quarters have seen a drastic change in earnings for each of the companies. The last two quarters have shown the same basic trends for each of the companies. An interesting point to note is the level of earnings per share, when compared to total revenue and market cap. Whole Foods is considerably smaller than both The Kroger Co. (NYSE:KR) and Safeway, and yet, its earnings per share are in line.
| Quick Ratio | Current Ratio | Debt to Equity | Return on Equity | Return on Assets | |
|---|---|---|---|---|---|
| Kroger | 0.26 | 0.72 | 2.11 | 36.34% | 6.27% |
| Safeway | 0.35 | 0.9 | 1.9 | 16.85% | 3.81% |
| Whole Foods | 1.45 | 1.85 | 0.43 | 14.67% | 10.27% |
