Critical Survey: Kraft Heinz (NASDAQ:KHC) and Nomad Foods (NYSE:NOMD)

Kraft Heinz (NASDAQ:KHC) and Nomad Foods (NYSE:NOMD) are both consumer staples companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, institutional ownership and analyst recommendations.

Dividends

Kraft Heinz pays an annual dividend of $1.60 per share and has a dividend yield of 6.6%. Nomad Foods pays an annual dividend of $0.68 per share and has a dividend yield of 5.7%. Kraft Heinz pays out -42.9% of its earnings in the form of a dividend. Nomad Foods pays out 47.2% 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. Nomad Foods has increased its dividend for 2 consecutive years. Kraft Heinz is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

78.2% of Kraft Heinz shares are held by institutional investors. Comparatively, 75.3% of Nomad Foods shares are held by institutional investors. 0.4% of Kraft Heinz shares are held by insiders. Comparatively, 17.3% of Nomad Foods shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Kraft Heinz and Nomad Foods, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kraft Heinz	3	18	0	1	1.95
Nomad Foods	0	2	3	0	2.60

Kraft Heinz presently has a consensus price target of $26.42, indicating a potential upside of 9.00%. Nomad Foods has a consensus price target of $17.00, indicating a potential upside of 43.34%. Given Nomad Foods’ stronger consensus rating and higher probable upside, analysts clearly believe Nomad Foods is more favorable than Kraft Heinz.

Valuation and Earnings

This table compares Kraft Heinz and Nomad Foods”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kraft Heinz	$25.85 billion	1.11	$2.74 billion	($3.73)	-6.50
Nomad Foods	$3.35 billion	0.54	$245.74 million	$1.44	8.24

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

Risk and Volatility

Kraft Heinz has a beta of 0.09, suggesting that its share price is 91% less volatile than the S&P 500. Comparatively, Nomad Foods has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500.

Profitability

This table compares Kraft Heinz and Nomad Foods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kraft Heinz	-17.35%	7.26%	3.86%
Nomad Foods	6.56%	9.73%	3.96%

Summary

Nomad Foods beats Kraft Heinz on 11 of the 18 factors compared between the two stocks.

About Kraft Heinz

The Kraft Heinz Company, together with its subsidiaries, manufactures and markets food and beverage products in North America and internationally. Its products include condiments and sauces, cheese and dairy products, meals, meats, refreshment beverages, coffee, and other grocery products under the Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Ore-Ida, Maxwell House, Kool-Aid, Jell-O, Heinz, ABC, Master, Quero, Kraft, Golden Circle, Wattie's, Pudliszki, and Plasmon brands. It sells its products through its own sales organizations, as well as through independent brokers, agents, and distributors to chain, wholesale, cooperative, and independent grocery accounts; convenience, value, and club stores; pharmacies and drug stores; mass merchants; foodservice distributors; institutions, including hotels, restaurants, bakeries, hospitals, health care facilities, and government agencies; and online through various e-commerce platforms and retailers. The company was formerly known as H.J. Heinz Holding Corporation and changed its name to The Kraft Heinz Company in July 2015. The Kraft Heinz Company was founded in 1869 and is based in Pittsburgh, Pennsylvania.

About Nomad Foods

Nomad Foods Limited, together with its subsidiaries, manufactures, markets, and distributes a range of frozen food products in the United Kingdom and internationally. The company offers frozen fish products, including fish fingers, coated fish, and natural fish; ready-to-cook vegetable products, such as peas and spinach; and frozen poultry and meat products comprising nuggets, grills, and burgers. It also provides meal products that include ready-to-cook noodles, pasta, lasagna, pancakes, and other ready-made meals; ice creams, such as in-home and out-of-home ice creams; and other products consisting of soups, pizzas, bakery goods, and meat substitutes. The company sells its products to supermarkets and food retail chains primarily under the Birds Eye, Green Cuisine, iglo, Findus, Aunt Bessie's, Goodfella's, Frikom, Ledo, La Cocinera, and Belviva brand names. Nomad Foods Limited was founded in 2014 and is headquartered in Feltham, the United Kingdom.