Comparing Costco Wholesale (NASDAQ:COST) and Raia Drogasil (OTCMKTS:RADLY)

Costco Wholesale (NASDAQ:COST) and Raia Drogasil (OTCMKTS:RADLY) are both consumer staples companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, earnings, profitability and risk.

Analyst Ratings

This is a breakdown of recent recommendations for Costco Wholesale and Raia Drogasil, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Costco Wholesale	1	9	23	0	2.67
Raia Drogasil	0	1	0	0	2.00

Costco Wholesale presently has a consensus price target of $1,046.27, suggesting a potential upside of 7.05%. Given Costco Wholesale’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Costco Wholesale is more favorable than Raia Drogasil.

Dividends

Costco Wholesale pays an annual dividend of $5.88 per share and has a dividend yield of 0.6%. Raia Drogasil pays an annual dividend of $0.04 per share and has a dividend yield of 1.0%. Costco Wholesale pays out 28.3% of its earnings in the form of a dividend. Raia Drogasil pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Costco Wholesale has increased its dividend for 22 consecutive years.

Earnings and Valuation

This table compares Costco Wholesale and Raia Drogasil”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Costco Wholesale	$303.15 billion	1.43	$9.23 billion	$20.76	47.08
Raia Drogasil	$7.92 billion	0.67	$232.27 million	$0.05	80.20

Costco Wholesale has higher revenue and earnings than Raia Drogasil. Costco Wholesale is trading at a lower price-to-earnings ratio than Raia Drogasil, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Costco Wholesale and Raia Drogasil’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Costco Wholesale	3.04%	27.60%	10.63%
Raia Drogasil	2.99%	20.12%	5.88%

Insider and Institutional Ownership

68.5% of Costco Wholesale shares are owned by institutional investors. 0.1% of Costco Wholesale shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Costco Wholesale beats Raia Drogasil on 15 of the 16 factors compared between the two stocks.

About Costco Wholesale

Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. The company offers branded and private-label products in a range of merchandise categories. It offers merchandise, such as sundries, dry groceries, candies, coolers, freezers, deli, liquor, and tobacco; appliances, electronics, health and beauty aids, hardware, garden and patio products, sporting goods, tires, toys and seasonal products, office supplies, automotive care products, postages, tickets, apparel, small appliances, furniture, domestics, housewares, special order kiosks, and jewelry; and meat, produce, service deli, and bakery products. The company also operates gasoline, pharmacies, optical, food courts, hearing-aid centers, and tire installation centers; and offers business delivery, travel, grocery, and various other services online. It also operates e-commerce websites. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.

About Raia Drogasil

Raia Drogasil S.A. engages in the retail sale of medicines, perfumery, personal care and beauty products, cosmetics, dermocosmetics, and specialty medicines in Brazil. It also markets its goods through telesales and call centers in the states of São Paulo, Tocantins, and Pernambuco. The company was founded in 1905 and is headquartered in São Paulo, Brazil.