Sugarmade (OTCMKTS:SGMD) and Essendant (NASDAQ:ESND) are both small-cap basic materials companies, but which is the better stock? We will compare the two companies based on the strength of their risk, dividends, institutional ownership, earnings, analyst recommendations, profitability and valuation.

Profitability

This table compares Sugarmade and Essendant’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sugarmade -111.65% N/A -363.63%
Essendant -1.15% 0.11% 0.03%

Institutional and Insider Ownership

83.6% of Essendant shares are owned by institutional investors. 5.2% of Sugarmade shares are owned by insiders. Comparatively, 1.6% of Essendant shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings for Sugarmade and Essendant, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sugarmade 0 0 0 0 N/A
Essendant 0 1 0 0 2.00

Essendant has a consensus price target of $10.00, indicating a potential downside of 21.26%. Given Essendant’s higher probable upside, analysts plainly believe Essendant is more favorable than Sugarmade.

Risk and Volatility

Sugarmade has a beta of -4.45, suggesting that its share price is 545% less volatile than the S&P 500. Comparatively, Essendant has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500.

Dividends

Essendant pays an annual dividend of $0.56 per share and has a dividend yield of 4.4%. Sugarmade does not pay a dividend.

Valuation & Earnings

This table compares Sugarmade and Essendant’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sugarmade $4.10 million 7.65 -$4.71 million N/A N/A
Essendant $5.04 billion 0.09 -$266.98 million N/A N/A

Sugarmade has higher earnings, but lower revenue than Essendant.

Summary

Essendant beats Sugarmade on 8 of the 11 factors compared between the two stocks.

Sugarmade Company Profile

Sugarmade, Inc. provides paper products derived from non-wood sources. The company produces and wholesales custom printed and generic supplies, including double poly paper, disposable, clear, plastic cold, paper coffee, yogurt, and ice cream cups, as well as cup lids, cup sleeves, food containers, soup containers, plastic spoons, and other products for quick service restaurant industry. It also engages in the manufacturing and distribution of various technologies and products, such as soil containing grow bags used in greenhouses, odor-resistant storage and transport products, lights to enhanced indoor cultivation, and other products that support the legal cultivation and processing of cannabis and other agricultural products through caligrownsupplies.com Website to distributors and retailers. In addition, the company distributes paper made from reclaimed sugarcane fiber; and offers Sriracha Seasoning Stix and Seasoning Stix blends through SrirachaStix.com Web platform. Sugarmade, Inc. was founded in 2009 and is headquartered in City of Industry, California.

Essendant Company Profile

Essendant Inc. operates as a distributor of workplace items in the United States and internationally. It offers janitorial and sanitation supplies, breakroom items, foodservice consumables, safety and security items, and paper and packaging supplies. The company also provides technology products, such as computer accessories, imaging supplies, and data storage products; and computer hardware, including printers and other peripherals. In addition, it offers traditional office products, including writing instruments, business machines, filing and record storage products, presentation products, shipping and mailing supplies, calendars, and general office accessories; and industrial supplies, such as hand and power tools, safety and security supplies, janitorial equipment, and oilfield and welding supplies, as well as industrial maintenance, repair, and operations items. Further, the company provides cut sheet paper products; automotive products; and desks, filing and storage solutions, and seating and systems furniture, as well as various products for education, government, healthcare, and professional services markets. It serves office and workplace dealers; facilities and maintenance distributors; technology, military, automotive aftermarket, healthcare, and other vertical suppliers; industrial resellers; national resellers; and resellers in the e-commerce channel. Essendant Inc. distributes its products through 70 distribution centers to approximately 29,000 reseller customers, as well as through online. The company was formerly known as United Stationers Inc. and changed its name to Essendant Inc. in June 2015. Essendant Inc. was founded in 1922 and is headquartered in Deerfield, Illinois.

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