Is This the Best Grocery Buy?

Grocery stores are a classic defensive play. Whatever happens in the economy, people still need to eat. And when financial pressures mean that people eat out less, grocery stores win.

Getting into the numbers
Who are the major grocery retailers and how do they stack up to one another?

Company

Market Cap (in millions)

Revenue, LTM (in millions)

Free Cash Flow, LTM (in millions)

Q1 Comparable Store Sales

CAPS Rating

(out of 5)

Costco (Nasdaq: COST  )

$25,316

$76,199

 $1,756

10%

****

Kroger (NYSE: KR  )

$12,749

$76,733

 $625.0

1.2%*

***

Safeway (NYSE: SWY  )

$8,122

$40,941

 $1,658.0

(3.1%)

***

Whole Foods (Nasdaq: WFMI  )

$6,695

$8,452

 $339.2

8.7%

***

SUPERVALU (NYSE: SVU  )

$2,651

$40,597

 $793.0

(6.8%)

*****

Weis Markets (NYSE: WMK  )

$905

$2,574

 $56.3

3%

**

Winn-Dixie (Nasdaq: WINN  )

$604

$7,218

 $34.2

(2.2%)

**

Data from Capital IQ (a division of Standard & Poor's) and the Motley Fool CAPS database. LTM = Last 12 months.

*2009 Q4 results.

It's important to keep track of revenue, but free cash flow gives us a better sense of what the company is doing with that revenue -- and whether it'll have the funds to invest in the business later. Same-store sales figures help us understand sales trends after expansion and contraction has been backed out of the equation.

Motley Fool CAPS player TSIF likes SUPERVALU as a turnaround play -- it has a new CEO who trained at Wal-Mart, and it's closing higher-cost stores and opening more lower-cost venues. Costco is another CAPS favorite for its great management and its lucrative membership model.

Which grocery retailer do you like and why? Let us know in the comments box below.

Fool editor Julie Clarenbach doesn't own any of the companies mentioned here. Costco and Wal-Mart are Motley Fool Inside Value picks. Costco and Whole Foods Market are Stock Advisor selections. The Fool owns shares of Costco. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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