Central Garden & Pet (NASDAQ: CENT) and MGP Ingredients (NASDAQ:MGPI) are both small-cap consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, earnings, profitability, analyst recommendations, risk, institutional ownership and valuation.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Central Garden & Pet and MGP Ingredients, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Central Garden & Pet 0 2 3 0 2.60
MGP Ingredients 0 1 1 0 2.50

Central Garden & Pet currently has a consensus target price of $38.33, suggesting a potential downside of 1.15%. MGP Ingredients has a consensus target price of $66.00, suggesting a potential upside of 4.48%. Given MGP Ingredients’ higher possible upside, analysts clearly believe MGP Ingredients is more favorable than Central Garden & Pet.

Earnings and Valuation

This table compares Central Garden & Pet and MGP Ingredients’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Central Garden & Pet $1.98 billion 1.01 $202.40 million $1.33 29.16
MGP Ingredients $333.96 million 3.16 $51.47 million $1.90 33.25

Central Garden & Pet has higher revenue and earnings than MGP Ingredients. Central Garden & Pet is trading at a lower price-to-earnings ratio than MGP Ingredients, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Central Garden & Pet and MGP Ingredients’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Central Garden & Pet 3.49% 13.66% 6.13%
MGP Ingredients 9.33% 21.30% 13.83%

Volatility and Risk

Central Garden & Pet has a beta of 0.11, suggesting that its stock price is 89% less volatile than the S&P 500. Comparatively, MGP Ingredients has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500.

Institutional & Insider Ownership

20.2% of Central Garden & Pet shares are held by institutional investors. Comparatively, 98.4% of MGP Ingredients shares are held by institutional investors. 11.6% of Central Garden & Pet shares are held by insiders. Comparatively, 23.5% of MGP Ingredients shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

MGP Ingredients pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. Central Garden & Pet does not pay a dividend. MGP Ingredients pays out 8.4% of its earnings in the form of a dividend.

Summary

MGP Ingredients beats Central Garden & Pet on 11 of the 16 factors compared between the two stocks.

About Central Garden & Pet

Central Garden & Pet Company is a marketer and producer of branded products and distributor of third party products in the pet and lawn and garden supplies industries in the United States. The Company operates in two segments: Pet segment and the Garden segment. It is a marketer and producer of pet supplies in the United States. In addition, its Pet segment operates sales and logistics networks in the industry strategically supporting its brands. Its principal pet supplies categories are dog and cat, aquatics, bird and small animal, wild bird feed and animal health products. The Company markets and produces various brands, including Pennington, The Rebels, AMDRO, Lilly Miller, Ironite, Sevin, and Over-N-Out. Its Garden segment operates a sales and logistics network that strategically supports its brands. The Company’s principal lawn and garden product lines include grass seed, wild bird feed and insect control products.

About MGP Ingredients

MGP Ingredients, Inc. is a producer and supplier of distilled spirits, and specialty wheat protein and starch food ingredients. The Company’s distilled spirits include bourbon and rye whiskeys, and grain neutral spirits, including vodka and gin. The Company’s segments include distillery products and ingredient solutions. The distillery products segment consists of food grade alcohol and distillery co-products, such as distillers feed and fuel grade alcohol. The ingredient solutions segment consists of specialty starches and proteins, commodity starches and commodity proteins. The distillery products segment also includes warehouse services, including barrel put away, barrel storage, and barrel retrieval services. It is also a producer of industrial alcohol for use in both food and non-food applications. The Company’s distillery products are derived from corn and other grains (including rye, barley, wheat, barley malt and milo), and its ingredient products are derived from wheat flour.

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