Big Lots (NYSE:BIG) and Walmart (NYSE:WMT) are both retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, analyst recommendations, valuation and institutional ownership.
Profitability
This table compares Big Lots and Walmart's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Big Lots | 10.30% | 26.25% | 7.61% |
| Walmart | 3.30% | 19.13% | 6.37% |
Dividends
Big Lots pays an annual dividend of $1.20 per share and has a dividend yield of 1.9%. Walmart pays an annual dividend of $2.16 per share and has a dividend yield of 1.6%. Big Lots pays out 32.7% of its earnings in the form of a dividend. Walmart pays out 43.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Walmart has increased its dividend for 45 consecutive years. Big Lots is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Recommendations
This is a summary of recent ratings and price targets for Big Lots and Walmart, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Big Lots | 1 | 4 | 4 | 0 | 2.33 |
| Walmart | 3 | 7 | 27 | 0 | 2.65 |
Big Lots presently has a consensus price target of $54.8182, indicating a potential downside of 14.02%. Walmart has a consensus price target of $149.5139, indicating a potential upside of 13.23%. Given Walmart's stronger consensus rating and higher possible upside, analysts clearly believe Walmart is more favorable than Big Lots.
Insider and Institutional Ownership
97.0% of Big Lots shares are held by institutional investors. Comparatively, 29.3% of Walmart shares are held by institutional investors. 0.9% of Big Lots shares are held by company insiders. Comparatively, 50.4% of Walmart shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Valuation and Earnings
This table compares Big Lots and Walmart's gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Big Lots | $5.32 billion | 0.44 | $242.46 million | $3.67 | 17.35 |
| Walmart | $523.96 billion | 0.71 | $14.88 billion | $4.93 | 26.78 |
Walmart has higher revenue and earnings than Big Lots. Big Lots is trading at a lower price-to-earnings ratio than Walmart, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Big Lots has a beta of 2.39, meaning that its stock price is 139% more volatile than the S&P 500. Comparatively, Walmart has a beta of 0.27, meaning that its stock price is 73% less volatile than the S&P 500.
Summary
Walmart beats Big Lots on 10 of the 17 factors compared between the two stocks.
