US Foods Holding Corp. (USFD) and Pure Storage Inc. (PSTG) both have caught the attention of the investment community that recently hit new highs. Naturally, this has created a bit of a stir amongst investors. We will compare the two companies across various metrics including growth, profitability, risk, return, dividends, and valuation to determine if one is a better choice than the other.
The company has grown sales at a 2.40% annual rate over the past five years, putting it in the low growth category. USFD has a net profit margin of 1.50% and is less profitable than the average company in the Food Distribution industry. In terms of efficiency, USFD has an asset turnover ratio of 2.5. This figure represents the amount of revenue a company generates per dollar of assets. USFD’s financial leverage ratio is 1.96, which indicates that the company’s asset base is primarily funded by equity capital. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 11.00%, which is better than the Food Distribution industry average ROE.
US Foods Holding Corp. (USFD) free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 2.26. All else equal, companies with higher FCF yields are viewed as cheaper. Company trades at a P/E ratio of 11.41, and is less expensive than the average stock in the Food Distribution industry. The average investment recommendation for USFD, taken from a group of Wall Street Analysts, is 2.10, or a Moderate Sell.
Over the past six months, US Foods Holding Corp. insiders have been net sellers, acquiring a net of 1.35 million shares. This implies that insiders have been feeling relatively bullish about the outlook for USFD. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. USFD has a beta of 1.47 and therefore an above average level of market volatility.
Pure Storage Inc. (NYSE:PSTG) operates in the Computer Hardware segment of the Technology sector. PSTG has increased sales at a 56.60% CAGR over the past five years, and is considered a medium growth stock. The company has a net profit margin of -12.20% and is less profitable than the average Computer Hardware player. PSTG’s asset turnover ratio is 0.68 and the company has financial leverage of 1.85. Company is therefore mostly financed by equity capital. PSTG’s return on equity of -26.00% is worse than the Computer Hardware industry average.
The company trades at a free cash flow yield of 1.86. The average analyst recommendation for PSTG is 2.00, or a Moderate Sell.
Pure Storage Inc. insiders have bought a net of 947823.0 shares during the past three months, which implies that the company’s top executives have been feeling bullish about the stock’s outlook. Finally, PSTG’s beta of 1.59 indicates that the stock has an above average level of market risk.
US Foods Holding Corp. (NYSE:USFD) scores higher than Pure Storage Inc. (NYSE:PSTG) on 6 of the 9 measures compared between the two companies. USFD has the better fundamentals, scoring higher on profitability metrics. USFD has better insider activity and sentiment signals.
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May 05, 2020 at 07:10PM
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Dissecting the Investment Cases for US Foods Holding Corp. (USFD) and Pure Storage Inc. (PSTG) - Weekly Oracle
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