Hershey Company (The) (NYSE: HSY) and Kellogg (NYSE:K) are both large-cap consumer staples companies, but which is the better stock? We will compare the two companies based on the strength of their risk, institutional ownership, analyst recommendations, earnings, dividends, valuation and profitability.

Volatility and Risk

Hershey Company (The) has a beta of 0.39, indicating that its stock price is 61% less volatile than the S&P 500. Comparatively, Kellogg has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500.

Institutional and Insider Ownership

51.4% of Hershey Company (The) shares are owned by institutional investors. Comparatively, 85.5% of Kellogg shares are owned by institutional investors. 0.9% of Hershey Company (The) shares are owned by company insiders. Comparatively, 1.3% of Kellogg shares are owned by company 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.

Dividends

Hershey Company (The) pays an annual dividend of $2.62 per share and has a dividend yield of 2.4%. Kellogg pays an annual dividend of $2.16 per share and has a dividend yield of 3.5%. Hershey Company (The) pays out 83.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kellogg pays out 97.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hershey Company (The) has raised its dividend for 7 consecutive years and Kellogg has raised its dividend for 12 consecutive years. Kellogg is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Hershey Company (The) and Kellogg, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hershey Company (The) 1 8 4 0 2.23
Kellogg 2 7 1 0 1.90

Hershey Company (The) currently has a consensus price target of $111.54, suggesting a potential upside of 1.99%. Kellogg has a consensus price target of $72.60, suggesting a potential upside of 18.63%. Given Kellogg’s higher probable upside, analysts clearly believe Kellogg is more favorable than Hershey Company (The).

Profitability

This table compares Hershey Company (The) and Kellogg’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hershey Company (The) 8.95% 119.66% 18.88%
Kellogg 6.12% 70.22% 9.15%

Valuation and Earnings

This table compares Hershey Company (The) and Kellogg’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hershey Company (The) $7.52 billion 2.21 $1.72 billion $3.14 34.83
Kellogg $12.79 billion 1.65 $2.27 billion $2.21 27.69

Kellogg has higher revenue and earnings than Hershey Company (The). Kellogg is trading at a lower price-to-earnings ratio than Hershey Company (The), indicating that it is currently the more affordable of the two stocks.

Summary

Hershey Company (The) beats Kellogg on 9 of the 17 factors compared between the two stocks.

Hershey Company (The) Company Profile

The Hershey Company is a producer of chocolate in North America. The Company’s principal product offerings include chocolate and non-chocolate confectionery products; gum and mint refreshment products; pantry items, such as baking ingredients and beverages, and snack items, such as spreads, meat snacks, bars and snack bites and mixes. Its segments include North America, and International and Other. The North America segment includes its chocolate and non-chocolate confectionery business, as well as its grocery and snacks business. This includes developing and growing its business in chocolate and non-chocolate confectionery, pantry, food service and other snacking product lines. The Company distributes and sells confectionery products in export markets of Asia, Latin America, the Middle East, Europe, Africa and other regions. As of December 31, 2016, the Company marketed, sold and distributed its products under more than 80 brand names in approximately 70 countries across the world.

Kellogg Company Profile

Kellogg Company is a manufacturer and marketer of ready-to-eat cereal and convenience foods. The Company’s principal products are ready-to-eat cereals and convenience foods, such as cookies, crackers, savory snacks, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles and veggie foods. Its segments include U.S. Morning Foods, which includes cereal, toaster pastries, health and wellness bars, and beverages; U.S. Snacks, which includes cookies, crackers, cereal bars, savory snacks and fruit-flavored snacks; U.S. Specialty, which represents food away from home channels, including food service, convenience, vending, Girl Scouts and food manufacturing; North America Other, which includes the U.S. Frozen, Kashi and Canada operating segments; Europe, which consists of European countries; Latin America, which consists of Central and South America and includes Mexico, and Asia Pacific, which consists of Sub-Saharan Africa, Australia and other Asian and Pacific markets.

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