McCormick & Company, (MKC) versus Dean Foods (DF) Critical Analysis
McCormick & Company, (NYSE: MKC) and Dean Foods (NYSE:DF) are both consumer staples companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.
This table compares McCormick & Company, and Dean Foods’ 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%|
This is a summary of recent ratings and price targets for McCormick & Company, and Dean Foods, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|McCormick & Company,||0||5||4||0||2.44|
McCormick & Company, currently has a consensus price target of $102.75, indicating a potential upside of 4.46%. Dean Foods has a consensus price target of $14.67, indicating a potential upside of 31.89%. Given Dean Foods’ higher possible upside, analysts clearly believe Dean Foods is more favorable than McCormick & Company,.
Insider & Institutional Ownership
72.9% of McCormick & Company, shares are owned by institutional investors. 15.3% of McCormick & Company, shares are owned by company insiders. Comparatively, 1.2% of Dean Foods shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares McCormick & Company, and Dean Foods’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|McCormick & Company,||$4.48 billion||2.49||$776.80 million||$3.77||26.09|
|Dean Foods||$7.91 billion||0.13||$376.23 million||$0.60||18.53|
McCormick & Company, has higher revenue, but lower earnings than Dean Foods. Dean Foods is trading at a lower price-to-earnings ratio than McCormick & Company,, indicating that it is currently the more affordable of the two stocks.
McCormick & Company, pays an annual dividend of $1.88 per share and has a dividend yield of 1.9%. Dean Foods pays an annual dividend of $0.36 per share and has a dividend yield of 3.2%. McCormick & Company, pays out 49.9% of its earnings in the form of a dividend. Dean Foods pays out 60.0% 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. McCormick & Company, has raised its dividend for 30 consecutive years.
Volatility and Risk
McCormick & Company, has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500. Comparatively, Dean Foods has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500.
McCormick & Company, beats Dean Foods on 14 of the 17 factors compared between the two stocks.
About McCormick & Company,
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.
About Dean Foods
Dean Foods Company is a food and beverage company. The Company processes and distributes fluid milk, and other dairy and dairy case products in the United States. It is engaged in manufacturing, marketing, selling and distributing a range of branded and private label dairy and dairy case products. It offers branded and private label dairy case products, including fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy products to retailers, distributors, foodservice outlets, educational institutions and governmental entities across the United States. It also offers juices, teas and bottled water. As of December 31, 2016, the Company had over 50 national, regional and local dairy brands, as well as private labels. As of December 31, 2016, the Company’s national, local and regional licensed brands included Alta Dena, Hygeia, PET, Arctic Splash, Jilbert, Pog, Barbers Dairy, Purity, Berkeley Farms, Land-O-Sun & design and ReadyLeaf, Broughton.
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