Coffee (NASDAQ:JVA – Get Free Report) and Hormel Foods (NYSE:HRL – Get Free Report) are both consumer staples companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.
Risk and Volatility
Coffee has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500. Comparatively, Hormel Foods has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500.
Dividends
Coffee pays an annual dividend of $0.08 per share and has a dividend yield of 2.0%. Hormel Foods pays an annual dividend of $1.17 per share and has a dividend yield of 5.6%. Coffee pays out 9.5% of its earnings in the form of a dividend. Hormel Foods pays out 185.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hormel Foods has increased its dividend for 60 consecutive years. Hormel Foods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Coffee | 0 | 2 | 0 | 0 | 2.00 |
| Hormel Foods | 1 | 6 | 2 | 0 | 2.11 |
Coffee presently has a consensus target price of $9.50, indicating a potential upside of 132.84%. Hormel Foods has a consensus target price of $26.14, indicating a potential upside of 25.73%. Given Coffee’s higher probable upside, equities research analysts clearly believe Coffee is more favorable than Hormel Foods.
Insider & Institutional Ownership
41.0% of Hormel Foods shares are held by institutional investors. 22.1% of Coffee shares are held by insiders. Comparatively, 0.6% of Hormel Foods shares are held by insiders. 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.
Profitability
This table compares Coffee and Hormel Foods’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Coffee | 4.85% | 16.20% | 11.61% |
| Hormel Foods | 2.82% | 9.91% | 5.89% |
Valuation and Earnings
This table compares Coffee and Hormel Foods”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Coffee | $96.28 million | 0.24 | $1.40 million | $0.84 | 4.86 |
| Hormel Foods | $12.11 billion | 0.95 | $478.20 million | $0.63 | 33.00 |
Hormel Foods has higher revenue and earnings than Coffee. Coffee is trading at a lower price-to-earnings ratio than Hormel Foods, indicating that it is currently the more affordable of the two stocks.
Summary
Hormel Foods beats Coffee on 9 of the 17 factors compared between the two stocks.
About Coffee
Coffee Holding Co., Inc. engages in manufacturing, roasting, packaging, marketing, and distributing roasted and blended coffees in the United States, Australia, Canada, England, and China. It offers wholesale green coffee products, including unroasted raw beans that are sold to large, medium, and small roasters, as well as coffee shop operators; and roasts, blends, packages, and sells coffee under private labels in cans, brick packages, and instants of various sizes. The company also roasts and blends company label branded coffee to supermarkets, wholesalers, and individually owned stores; and sells tabletop coffee roasting equipment, instant coffees, and tea products for its customers. Its coffee brands include Cafe Caribe, Don Manuel, S&W, Cafe Supremo, Via Roma, Premier Roasters, and Harmony Bay. The company was formerly known as Transpacific International Group Corp and changed its name to Coffee Holding Co., Inc. in April 1998. Coffee Holding Co., Inc. was founded in 1971 and is headquartered in Staten Island, New York.
About Hormel Foods
Hormel Foods Corporation develops, processes, and distributes various meat, nuts, and other food products to retail, foodservice, deli, and commercial customers in the United States and internationally. It operates through three segments: Retail, Foodservice, and International segments. The company provides various perishable products that include fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles, and bacons; and shelf-stable products comprising canned luncheon meats, nut butters, snack nuts, chili, shelf-stable microwaveable meals, hash, stews, tortillas, salsas, tortilla chips, nutritional food supplements, and others. It sells its products under the HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, BURKE, CAFÉ H, CERATTI, CHI-CHI'S, COLUMBUS, COMPLEATS, CORN NUTS, CURE 81, DAN'S PRIZE, DI LUSSO, DINTY MOORE, DON MIGUEL, DOÑA MARIA, EMBASA, FAST N EASY, FIRE BRAISED, FONTANINI, HAPPY LITTLE PLANTS, HERDEZ, HORMEL GATHERINGS, HORMEL SQUARE TABLE, HORMEL VITAL CUISINE, HOUSE OF TSANG, JENNIE-O, JUSTIN'S, LA VICTORIA, LAYOUT, LLOYD'S, MARY KITCHEN, MR. PEANUT, NATURAL CHOICE, NUT-RITION, OLD SMOKEHOUSE, OVEN READY, PILLOW PACK, PLANTERS, ROSA GRANDE, SADLER'S SMOKEHOUSE, SKIPPY, SPAM, SPECIAL RECIPE, THICK & EASY, VALLEY FRESH, AND WHOLLY brands through sales personnel, independent brokers, and distributors. The company was formerly known as Geo. A. Hormel & Company and changed its name to Hormel Foods Corporation in January 1995. Hormel Foods Corporation was founded in 1891 and is headquartered in Austin, Minnesota.
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