Critical Review: BJ’s Wholesale Club (NYSE:BJ) versus Nestle (OTCMKTS:NSRGY)

Nestle (OTCMKTS:NSRGY) and BJ’s Wholesale Club (NYSE:BJ) are both large-cap consumer staples companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, analyst recommendations, risk, dividends and valuation.

Volatility & Risk

Nestle has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500. Comparatively, BJ’s Wholesale Club has a beta of 0.36, meaning that its stock price is 64% less volatile than the S&P 500.

Earnings and Valuation

This table compares Nestle and BJ’s Wholesale Club”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nestle	$107.99 billion	2.30	$10.90 billion	N/A	N/A
BJ’s Wholesale Club	$21.46 billion	0.59	$578.38 million	$4.38	22.32

Nestle has higher revenue and earnings than BJ’s Wholesale Club.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Nestle	N/A	N/A	N/A
BJ’s Wholesale Club	2.70%	27.55%	7.90%

Insider & Institutional Ownership

0.6% of Nestle shares are owned by institutional investors. Comparatively, 98.6% of BJ’s Wholesale Club shares are owned by institutional investors. 1.4% of BJ’s Wholesale Club shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Nestle and BJ’s Wholesale Club, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nestle	1	2	1	0	2.00
BJ’s Wholesale Club	1	10	9	0	2.40

Nestle presently has a consensus target price of $91.00, suggesting a potential downside of 5.50%. BJ’s Wholesale Club has a consensus target price of $107.63, suggesting a potential upside of 10.07%. Given BJ’s Wholesale Club’s stronger consensus rating and higher possible upside, analysts plainly believe BJ’s Wholesale Club is more favorable than Nestle.

Summary

BJ’s Wholesale Club beats Nestle on 8 of the 12 factors compared between the two stocks.

About Nestle

Nestlé S.A., together with its subsidiaries, operates as a food and beverage company. The company operates through Zone North America; Zone Europe; Zone Asia, Oceania, and Africa; Zone Latin America; Zone Greater China; Nespresso; and Nestlé Health Science segments. It offers baby foods under the Cerelac, Gerber, Nido, and NaturNes brands; bottled water under the Nestlé Pure Life, Perrier, Vittel, Buxton, Erikli, and S.Pellegrino brands; cereals under the Fitness, Nesquik, cheerios, and Lion Cereals brands; and chocolate and confectionery products under the KitKat, Smarties, Aero, Nestlé Les Recettes de l'Atelier, Milkybar, Baci Perugina, Quality Street, and Fitness brands. The company provides coffee products under the Nescafé, Nespresso, Nescafé Dolce Gusto, Starbucks Coffee At Home, and Blue Bottle Coffee brands; culinary, chilled, and frozen foods under the Maggi, DiGiorno, Thomy, Garden Gourmet, Sweet Earth, Hot Pockets, Stouffer's, Buitoni, Lean, and Life Cuisine brands; dairy products under the Carnation, Nido, Bear, Coffee-Mate, and La Laitière brands; and drinks under the Nesquik, Nestea, Nescafé, and Milo brands. In addition, it offers food service products under the Milo, Nescafé, Maggi, Chef, Nestea, Stouffer's, Chef-Mate, Minor's, and Lean Cuisine brand names; healthcare nutrition products under the Boost, Garden of Life, Nature's Bounty, Persona, Vital Proteins, Solgar, Peptamen, Resource, Vitaflo, Impact, and Compleat brands; ice cream products under the Movenpick, Häagen-Dazs, Nestlé Ice Cream, and Extrême brands; and pet care products under the Purina, ONE, Alpo, Felix, Pro Plan, Cat Chow, Fancy Feast, Bakers, Friskies, Dog Chow, Beneful, and Gourmet brands. The company was founded in 1866 and is headquartered in Vevey, Switzerland.

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.