Critical Analysis: Arko (NASDAQ:ARKO) and Eurocash (OTCMKTS:EUSHY)

Eurocash (OTCMKTS:EUSHY) and Arko (NASDAQ:ARKO) are both consumer defensive companies, but which is the better business? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, profitability, institutional ownership, dividends and valuation.

Insider & Institutional Ownership

0.2% of Eurocash shares are held by institutional investors. Comparatively, 78.3% of Arko shares are held by institutional investors. 21.6% of Arko shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Eurocash and Arko’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eurocash	N/A	N/A	N/A
Arko	0.27%	8.88%	0.66%

Dividends

Eurocash pays an annual dividend of $0.58 per share and has a dividend yield of 16.5%. Arko pays an annual dividend of $0.12 per share and has a dividend yield of 1.8%. Eurocash pays out 43.9% of its earnings in the form of a dividend. Arko pays out 75.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eurocash is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current ratings and recommmendations for Eurocash and Arko, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eurocash	0	0	0	0	0.00
Arko	0	2	0	0	2.00

Arko has a consensus price target of $6.13, indicating a potential downside of 6.63%. Given Arko’s stronger consensus rating and higher possible upside, analysts plainly believe Arko is more favorable than Eurocash.

Valuation and Earnings

This table compares Eurocash and Arko”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eurocash	N/A	N/A	N/A	$1.32	2.65
Arko	$9.41 billion	0.08	$34.37 million	$0.16	41.00

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

Summary

Arko beats Eurocash on 9 of the 12 factors compared between the two stocks.

About Eurocash

Eurocash S.A. engages in the wholesale distribution of food and other fast moving consumer goods (FMCG) in Poland. The company operates through Wholesale, Retail, and Projects segments. Its FMCG products include food products, soft drinks, alcoholic beverages, tobacco products, and household chemicals and cosmetics. The company markets its products to traditional retail stores, including small supermarkets, grocery stores, and specialized grocery stores; and kiosks, retail outlets, and convenience stores, restaurants, gas stations, hotel and café chains, and catering outlets. It operates a network of Cash & Carry warehouses; Delikatesy Centrum network supermarkets; Inmedio; and franchise and partner stores of Eurocash distribution. Eurocash S.A. was incorporated in 2014 and is based in Komorniki, Poland.

About Arko

Arko Corp. operates convenience stores in the United States. It operates through Retail, Wholesale, Fleet Fueling, and GPMP segments. The Retail segment engages in the sale of fuel and merchandise to retail consumers. Its Wholesale segment supplies fuel to third-party dealers and consignment agents. The Fleet Fueling segment supplies fuel to proprietary and third-party cardlock, and issuance of proprietary fuel cards. Its GPMP segment supplies fuel to retail and wholesale segments. The company is based in Richmond, Virginia.