Kellogg (NYSE: K) and McCormick & Company, (NYSE:MKC) are both large-cap consumer staples companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, dividends, earnings, profitability and institutional ownership.
Kellogg pays an annual dividend of $2.08 per share and has a dividend yield of 3.0%. McCormick & Company, pays an annual dividend of $1.88 per share and has a dividend yield of 1.9%. Kellogg pays out 94.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. McCormick & Company, pays out 49.9% of its earnings in the form of a dividend. Kellogg has raised its dividend for 12 consecutive years and McCormick & Company, has raised its dividend for 30 consecutive years.
This is a summary of current ratings and target prices for Kellogg and McCormick & Company,, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|McCormick & Company,||0||5||4||0||2.44|
Kellogg currently has a consensus price target of $74.78, indicating a potential upside of 8.67%. McCormick & Company, has a consensus price target of $102.75, indicating a potential upside of 5.90%. Given Kellogg’s higher probable upside, analysts plainly believe Kellogg is more favorable than McCormick & Company,.
Volatility & Risk
Kellogg has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500. Comparatively, McCormick & Company, has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500.
This table compares Kellogg and McCormick & Company,’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|McCormick & Company,||10.69%||28.28%||10.36%|
Insider and Institutional Ownership
83.5% of Kellogg shares are owned by institutional investors. Comparatively, 73.9% of McCormick & Company, shares are owned by institutional investors. 1.3% of Kellogg shares are owned by insiders. Comparatively, 15.3% of McCormick & Company, shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Valuation & Earnings
This table compares Kellogg and McCormick & Company,’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Kellogg||$12.79 billion||1.88||$2.27 billion||$2.21||31.14|
|McCormick & Company,||$4.48 billion||2.46||$776.80 million||$3.77||25.74|
Kellogg has higher revenue and earnings than McCormick & Company,. McCormick & Company, is trading at a lower price-to-earnings ratio than Kellogg, indicating that it is currently the more affordable of the two stocks.
McCormick & Company, beats Kellogg on 11 of the 17 factors compared between the two stocks.
Kellogg Company Profile
Kellogg Company is a manufacturer and marketer of ready-to-eat cereal and convenience foods. The Company’s principal products are ready-to-eat cereals and convenience foods, such as cookies, crackers, savory snacks, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles and veggie foods. Its segments include U.S. Morning Foods, which includes cereal, toaster pastries, health and wellness bars, and beverages; U.S. Snacks, which includes cookies, crackers, cereal bars, savory snacks and fruit-flavored snacks; U.S. Specialty, which represents food away from home channels, including food service, convenience, vending, Girl Scouts and food manufacturing; North America Other, which includes the U.S. Frozen, Kashi and Canada operating segments; Europe, which consists of European countries; Latin America, which consists of Central and South America and includes Mexico, and Asia Pacific, which consists of Sub-Saharan Africa, Australia and other Asian and Pacific markets.
McCormick & Company, Company Profile
McCormick & Company, Incorporated is engaged in manufacturing, marketing and distributing spices, seasoning mixes, condiments and other flavorful products to the food industry, including retailers, food manufacturers and foodservice businesses. The Company’s segments include consumer and industrial. The Company is involved in the manufacturing and sales of flavorful products. As of November 30, 2016, it offered brands for consumers in approximately 150 countries and territories. The Company’s brands in the Americas include McCormick, Lawry’s, and Club House, as well as brands, such as Gourmet Garden and OLD BAY. It provides a range of products to food manufacturers and foodservice customers. The Company’s sales, distribution and production facilities are located in North America, Europe and China. It markets regional and ethnic brands, such as Zatarain’s, Stubb’s, Thai Kitchen and Simply Asia. The Company offers sensory testing, culinary research, food safety and flavor application.
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