As we noted in the last week’s issue, over the past three months, one of the leaders of growth in the S&P 500 index has been the Consumer Staples Distribution & Retail industry (+18.4%).
The largest (by market capitalization) companies in this industry: Walmart ($486.0B) and Costco ($348.5B), which respectively rank first and third among the world’s largest retailers.
According to the latest quarterly reporting data, we analyzed each company’s profitability, strength, and efficiency criteria using the methodology of Stanford University professor Joseph Piotroski.
As you can see, in terms of fundamentals, both companies are currently showing quite strong results. However, Walmart is superior to Costco in terms of sustainability. Both companies look attractive for medium- and long-term investments.
Over the past 3 months, Walmart’s stock has risen by +17% and Costco’s by +19% (the S&P 500 index is up +12%). Costco has not only outperformed its closest competitor, but also demonstrated better results compared to the index.
So, there is no single winner in today’s battle. Walmart’s business looks healthier in terms of funding and liquidity, but Costco is superior in terms of financial leverage, and its stock is showing better dynamics.
* This is not an investment recommendation. It is up to each individual to decide which criteria to favor when making an investment decision, taking into account their goals and individual risk tolerance.
