Critical Analysis: Krispy Kreme (NASDAQ:DNUT) and BJ’s Wholesale Club (NYSE:BJ)

BJ’s Wholesale Club (NYSE:BJ) and Krispy Kreme (NASDAQ:DNUT) are both consumer staples companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, profitability, risk, valuation, earnings and analyst recommendations.

Risk and Volatility

BJ’s Wholesale Club has a beta of 0.36, meaning that its stock price is 64% less volatile than the S&P 500. Comparatively, Krispy Kreme has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500.

Earnings & Valuation

This table compares BJ’s Wholesale Club and Krispy Kreme”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BJ’s Wholesale Club	$21.46 billion	0.59	$534.42 million	$4.34	22.32
Krispy Kreme	$1.52 billion	0.39	-$515.77 million	($3.03)	-1.16

BJ’s Wholesale Club has higher revenue and earnings than Krispy Kreme. Krispy Kreme is trading at a lower price-to-earnings ratio than BJ’s Wholesale Club, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares BJ’s Wholesale Club and Krispy Kreme’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BJ’s Wholesale Club	2.70%	27.55%	7.90%
Krispy Kreme	-33.87%	-3.45%	-1.05%

Insider and Institutional Ownership

98.6% of BJ’s Wholesale Club shares are owned by institutional investors. Comparatively, 81.7% of Krispy Kreme shares are owned by institutional investors. 1.4% of BJ’s Wholesale Club shares are owned by company insiders. Comparatively, 3.0% of Krispy Kreme shares are owned by company 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 for BJ’s Wholesale Club and Krispy Kreme, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BJ’s Wholesale Club	1	10	9	0	2.40
Krispy Kreme	3	5	2	0	1.90

BJ’s Wholesale Club currently has a consensus price target of $107.63, indicating a potential upside of 11.13%. Krispy Kreme has a consensus price target of $4.52, indicating a potential upside of 28.68%. Given Krispy Kreme’s higher possible upside, analysts clearly believe Krispy Kreme is more favorable than BJ’s Wholesale Club.

Summary

BJ’s Wholesale Club beats Krispy Kreme on 11 of the 14 factors compared between the two stocks.

About BJ’s Wholesale Club

BJ’s Wholesale Club Holdings, Inc. engages in the operation of membership warehouse clubs. Its product categories include grocery, household and pet, television and electronics, furniture, computer and tablets, patio and outdoor living, lawn and garden, baby and kids, toys, home, health and beauty, appliances, and jewelry. The company was founded in 1984 and is headquartered in Marlborough, MA.

About Krispy Kreme

Krispy Kreme, Inc., together with its subsidiaries, produces doughnuts in the United States, the United Kingdom, Ireland, Australia, New Zealand, Mexico, Canada, Japan, and internationally. The company operates through three segments: U.S., International, and Market Development. The company offers doughnut experiences through hot light theater and fresh shops, delivered fresh daily branded cabinets and merchandising units within grocery and convenience stores, quick service restaurants, club memberships, drug stores, and ecommerce, as well as through its branded sweet treat line comprising Krispy Kreme branded sweet treats. It also provides cookies under the Insomnia Cookies brand, cookie cakes, ice cream, cookie-wiches, and brownies; and operates Krispy Kreme company-owned shops and franchise shops. The company was formerly known as Krispy Kreme Doughnuts, Inc. and changed its name to Krispy Kreme, Inc. in May 2021. Krispy Kreme, Inc. was founded in 1937 and is based in Charlotte, North Carolina.