Starbucks vs Walmart Which Is a Better Investment?

Starbucks and Walmart are two giants in the retail industry, but they cater to different markets. Starbucks is known for its premium coffee and cozy cafe atmosphere, while Walmart is a one-stop shop for affordable goods. Investors often compare the two stocks due to their popularity and financial stability. Starbucks has a strong presence in the global market with continuous growth in revenue, while Walmart is a retail powerhouse with consistent performance. Both stocks have their strengths and weaknesses, making them competitive options for investors seeking stability and growth potential.

Starbucks or Walmart?

When comparing Starbucks and Walmart, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Starbucks and Walmart.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Starbucks has a dividend yield of 2.36%, while Walmart has a dividend yield of 0.96%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Starbucks reports a 5-year dividend growth of 10.35% year and a payout ratio of 68.73%. On the other hand, Walmart reports a 5-year dividend growth of 1.85% year and a payout ratio of 41.18%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Starbucks P/E ratio at 29.76 and Walmart's P/E ratio at 43.58. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Starbucks P/B ratio is -15.03 while Walmart's P/B ratio is 8.03.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Starbucks has seen a 5-year revenue growth of 0.75%, while Walmart's is 0.34%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Starbucks's ROE at -46.35% and Walmart's ROE at 18.91%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $97.99 for Starbucks and $83.94 for Walmart. Over the past year, Starbucks's prices ranged from $71.55 to $107.50, with a yearly change of 50.24%. Walmart's prices fluctuated between $49.85 and $85.79, with a yearly change of 72.11%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.