Critical Review: Swatch Group (OTCMKTS:SWGAY) and Grocery Outlet (NASDAQ:GO)

Swatch Group (OTCMKTS:SWGAY) and Grocery Outlet (NASDAQ:GO) are both consumer staples companies, but which is the better business? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, valuation, analyst recommendations and dividends.

Analyst Recommendations

This is a breakdown of recent ratings for Swatch Group and Grocery Outlet, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Swatch Group	0	3	0	0	2.00
Grocery Outlet	2	11	0	0	1.85

Grocery Outlet has a consensus target price of $10.32, indicating a potential upside of 30.28%. Given Grocery Outlet’s higher probable upside, analysts clearly believe Grocery Outlet is more favorable than Swatch Group.

Profitability

This table compares Swatch Group and Grocery Outlet’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Swatch Group	N/A	N/A	N/A
Grocery Outlet	-8.08%	5.69%	1.86%

Insider and Institutional Ownership

99.9% of Grocery Outlet shares are owned by institutional investors. 4.5% of Grocery Outlet shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Swatch Group and Grocery Outlet”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Swatch Group	$7.58 billion	4.08	$3.62 million	N/A	N/A
Grocery Outlet	$4.69 billion	0.17	-$224.91 million	($3.88)	-2.04

Swatch Group has higher revenue and earnings than Grocery Outlet.

Volatility & Risk

Swatch Group has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500. Comparatively, Grocery Outlet has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500.

Summary

Swatch Group beats Grocery Outlet on 6 of the 11 factors compared between the two stocks.

About Swatch Group

The Swatch Group AG designs, manufactures, and sells finished watches, jewelry, and watch movements and components worldwide. The company operates through Watches & Jewelry and Electronic Systems segments. The Watches & Jewelry segment designs, produces, and commercializes watches and jewelry. The Electronic Systems segment engages in the design, production, and commercialization of electronic components, as well as sports timing activities. It is also involved in the provision of assembly, research and development, administration, polishing, logistics and distribution, and customer services; and hard material products, microelectronics, watch cases and crowns, miniature low-frequency quartz crystals, thin wires, miniature batteries, watch dials, watch hands, bracelets, sports timing technology and equipment, precision parts, and assembly electronic components. In addition, the company engages in retail, communication, real estate, real estate management, finance, reinsurance, and art center businesses. It offers its watch and jewelry products primarily under the Breguet, Harry Winston, Blancpain, Glashütte Original, Jaquet Droz, Léon Hatot, Omega, Longines, Rado, Union Glashütte, Tissot, Balmain, Certina, Mido, Hamilton, Swatch, and Flik Flak brands. The Swatch Group AG was founded in 1983 and is headquartered in Biel/Bienne, Switzerland.

About Grocery Outlet

Grocery Outlet Holding Corp. operates as a retailer of consumables and fresh products sold through independently operated stores in the United States. Its stores offer products in various categories, such as dairy and deli, produce, floral, fresh meat, seafood products, grocery, general merchandise, health and beauty care, frozen food, beer and wine, and ethnic products. The company was founded in 1946 and is headquartered in Emeryville, California.