Financial Review: Dollarama (OTCMKTS:DLMAF) vs. Wal-Mart de México (OTCMKTS:WMMVY)

Wal-Mart de México (OTCMKTS:WMMVY) and Dollarama (OTCMKTS:DLMAF) are both consumer defensive companies, but which is the better business? We will compare the two companies based on the strength of their profitability, risk, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Profitability

This table compares Wal-Mart de México and Dollarama’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wal-Mart de México	5.91%	27.32%	12.41%
Dollarama	N/A	N/A	N/A

Dividends

Wal-Mart de México pays an annual dividend of $0.97 per share and has a dividend yield of 3.4%. Dollarama pays an annual dividend of $0.31 per share and has a dividend yield of 0.3%. Wal-Mart de México pays out 54.8% of its earnings in the form of a dividend. Dollarama pays out 15.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Wal-Mart de México and Dollarama, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wal-Mart de México	0	0	1	0	3.00
Dollarama	0	1	1	0	2.50

Dollarama has a consensus price target of $129.00, indicating a potential upside of 26.47%. Given Dollarama’s higher probable upside, analysts plainly believe Dollarama is more favorable than Wal-Mart de México.

Earnings and Valuation

This table compares Wal-Mart de México and Dollarama”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wal-Mart de México	$49.69 billion	1.01	$2.91 billion	$1.77	16.21
Dollarama	N/A	N/A	N/A	$2.04	50.02

Wal-Mart de México has higher revenue and earnings than Dollarama. Wal-Mart de México is trading at a lower price-to-earnings ratio than Dollarama, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

37.4% of Dollarama shares are owned by institutional investors. 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.

Summary

Wal-Mart de México beats Dollarama on 6 of the 11 factors compared between the two stocks.

About Wal-Mart de México

Wal-Mart de México, S.A.B. de C.V. owns and operates self-service stores in Mexico and Central America. The company operates discount warehouses and stores, hypermarkets, supermarkets, and membership self-service wholesale stores. It operates Bodega Aurrerá discount stores, Walmart hypermarkets, Walmart Express supermarkets, and Sam’s Club membership self-service wholesale stores. The company operates Despensa Familiar and Palí discount stores; Paiz, La Despensa de Don Juan, La Unión, and Más x Menos supermarkets; Bodegas, Maxi Bodega, and Maxi Palí stores; and Walmart hypermarkets in Costa Rica, Guatemala, Honduras, Nicaragua, and El Salvador. In addition, it imports and sells goods; develops properties; and manages real estate companies. The company was founded in 1958 and is headquartered in Mexico City, Mexico. Wal-Mart de México, S.A.B. de C.V. operates as a subsidiary of Intersalt, S. De R.l. De C.v.

About Dollarama

Dollarama Inc. operates a chain of dollar stores in Canada. Its stores offer general merchandise, consumables, and seasonal products. It also sells its products through online store. The company was formerly known as Dollarama Capital Corporation and changed its name to Dollarama Inc. in September 2009. Dollarama Inc. was founded in 1992 and is headquartered in Mount Royal, Canada.