Freshpet (NASDAQ: FRPT) and Blue Buffalo Pet Products (NASDAQ:BUFF) are both non-cyclical consumer goods & services companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, profitabiliy, analyst recommendations, dividends, institutional ownership and risk.

Volatility and Risk

Freshpet has a beta of 1.88, suggesting that its stock price is 88% more volatile than the S&P 500. Comparatively, Blue Buffalo Pet Products has a beta of 1.97, suggesting that its stock price is 97% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Freshpet and Blue Buffalo Pet Products, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Freshpet 0 4 2 0 2.33
Blue Buffalo Pet Products 1 3 5 1 2.60

Freshpet presently has a consensus price target of $11.80, suggesting a potential downside of 28.92%. Blue Buffalo Pet Products has a consensus price target of $29.38, suggesting a potential upside of 31.96%. Given Blue Buffalo Pet Products’ stronger consensus rating and higher probable upside, analysts plainly believe Blue Buffalo Pet Products is more favorable than Freshpet.

Profitability

This table compares Freshpet and Blue Buffalo Pet Products’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Freshpet -8.34% -10.79% -9.12%
Blue Buffalo Pet Products 11.69% 122.62% 25.78%

Institutional and Insider Ownership

61.7% of Freshpet shares are owned by institutional investors. Comparatively, 88.4% of Blue Buffalo Pet Products shares are owned by institutional investors. 8.2% of Freshpet shares are owned by company insiders. Comparatively, 10.3% of Blue Buffalo Pet Products shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Freshpet and Blue Buffalo Pet Products’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Freshpet $136.11 million 3.88 $7.51 million ($0.13) -127.68
Blue Buffalo Pet Products $1.17 billion 3.74 $273.36 million $0.68 32.74

Blue Buffalo Pet Products has higher revenue and earnings than Freshpet. Freshpet is trading at a lower price-to-earnings ratio than Blue Buffalo Pet Products, indicating that it is currently the more affordable of the two stocks.

Summary

Blue Buffalo Pet Products beats Freshpet on 13 of the 14 factors compared between the two stocks.

Freshpet Company Profile

Freshpet, Inc. is a manufacturer of fresh, refrigerated pet food distributed across North America. The Company operates in the segment of manufacturing, marketing and distribution of pet food and pet treats for dogs and cats. The Company’s products consist of dog food, cat food, and dog and cat treats. Its recipes include real, fresh meat and varying combinations of vegetables, leafy greens and anti-oxidant rich fruits, without the use of preservatives, additives or artificial ingredients. All of its products are sold under the Freshpet brand name, with ingredients, packaging and labeling customized by class of retail. It also offers fresh treats across all classes of retail under the Dognation and Dog Joy labels. The Company’s products are available in various forms, including slice and serve rolls, bagged meals and tubs. All of the Company’s products are manufactured in the United States.

Blue Buffalo Pet Products Company Profile

Blue Buffalo Pet Products, Inc. (BBPP) is a holding company. The Company operates as a pet food company. The Company, through its subsidiaries, develops, produces, markets and sells pet food under product lines, including BLUE Life Protection Formula, BLUE Wilderness, BLUE Basics, BLUE Freedom and BLUE Natural Veterinary Diet lines. Its product lines of pet food include various product types for dogs and cats. The Company categorizes its products as dry foods, and wet foods, treats and other products. It has a product portfolio across various product types, including diet types, breed sizes for dogs, life stages, flavors, product functions, and textures and cuts for wet foods. BLUE Wilderness is a high-meat, high-protein and grain-free ancestral feeding line. BLUE Basics is a line of limited ingredient diet products for pets with food sensitivities. BLUE Freedom is a grain-free line. BLUE Natural Veterinary Diet is a line of Therapeutic diets for pets, offered through veterinarians.

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