Whole Foods Market, Inc. (WFM), The Kroger Co. (KR), The Fresh Market Inc (TFM): Who To Buy?

Interestingly, The Fresh Market Inc (NASDAQ:TFM) delivered a higher margin of 4.83%, beating Whole Foods’ net margin of more than 4%. The return on equity is also high at nearly 39.5%, more than 2.5 times higher than the return on equity of 14.7% of Whole Foods. At $43 per share, The Fresh Market is worth nearly $2.1 billion. The market seems to value The Fresh Market Inc (NASDAQ:TFM) quite expensively, at nearly 14 times EV/EBITDA.

Among the three, income investors would like The Kroger Co. (NYSE:KR) the most with its highest dividend yield at 1.70%, while Whole Foods’ yield is much lower at 0.90%. The Fresh Market Inc (NASDAQ:TFM) does not pay any dividend. Interestingly, Whole Foods pays as much as 97% of its earnings in dividend, while Kroger seems to be quite conservative in its dividend policy, with a payout ratio of only 18%.

My Foolish take

Among the three, I still like Kroger the most due to its much lower valuation, conservative payout ratio, and the highest dividend yield. With its global leading position in the grocery retailing market, Kroger would have a lot of resources to grow itself into a growing organic and fresh food products niche market.

The article Which Grocery Retailer Should You Buy? originally appeared on Fool.com and is written by Anh Hoang.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.