Archer-Daniels-Midland (NYSE: ADM) and Penford Corp (NASDAQ:PENX) are both consumer staples companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.

Insider & Institutional Ownership

72.9% of Archer-Daniels-Midland shares are held by institutional investors. 2.7% of Archer-Daniels-Midland shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Archer-Daniels-Midland and Penford Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Archer-Daniels-Midland 2.22% 8.40% 3.71%
Penford Corp 2.06% 8.92% 3.56%

Dividends

Archer-Daniels-Midland pays an annual dividend of $1.28 per share and has a dividend yield of 2.9%. Penford Corp does not pay a dividend. Archer-Daniels-Midland pays out 53.8% of its earnings in the form of a dividend. Penford Corp has increased its dividend for 41 consecutive years.

Valuation and Earnings

This table compares Archer-Daniels-Midland and Penford Corp’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Archer-Daniels-Midland $62.26 billion 0.39 $2.70 billion $2.38 18.25
Penford Corp N/A N/A N/A N/A N/A

Archer-Daniels-Midland has higher revenue and earnings than Penford Corp.

Analyst Recommendations

This is a breakdown of current ratings for Archer-Daniels-Midland and Penford Corp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Archer-Daniels-Midland 2 6 1 0 1.89
Penford Corp 0 0 0 0 N/A

Archer-Daniels-Midland presently has a consensus target price of $42.38, indicating a potential downside of 2.45%. Given Archer-Daniels-Midland’s higher probable upside, equities analysts plainly believe Archer-Daniels-Midland is more favorable than Penford Corp.

Summary

Archer-Daniels-Midland beats Penford Corp on 8 of the 11 factors compared between the two stocks.

Archer-Daniels-Midland Company Profile

Archer-Daniels-Midland Company is a processor of oilseeds, corn, wheat, cocoa and other agricultural commodities. The Company manufactures protein meal, vegetable oil, corn sweeteners, flour, biodiesel, ethanol, and other food and feed ingredients. Its segments include Agricultural Services, which utilizes its United States grain elevator, global transportation network and port operations to buy, store, clean and transport agricultural commodities, such as oilseeds, wheat, milo, oats, rice and barley, and resells these commodities primarily as food and feed ingredients and as raw materials for the agricultural processing industry; Corn Processing, which is engaged in corn wet milling and dry milling activities; Oilseeds Processing, which includes global activities related to the origination, merchandising, crushing and further processing of oilseeds; Wild Flavors and Specialty Ingredients products, which include flavors, sweeteners and health ingredients; Other, and Corporate.

Penford Corp Company Profile

Penford Corporation (Penford) is a developer, manufacturer and marketer of natural-based ingredient systems for food and industrial applications, including fuel grade ethanol. The Company has research and development capabilities, which are used in understanding the complex chemistry of carbohydrate-based materials and in developing applications to address customer needs. Penford operates in two business segments: Industrial Ingredients and Food Ingredients. Industrial Ingredients segment is a supplier of chemically modified starches to the paper and packaging industries. Industrial Ingredients also produces food grade corn starch for sale by the Company’s Food Ingredients business. Food Ingredients segment is a developer and manufacturer of specialty starches and dextrins to the food manufacturing and food service industries. This business is engaged is in leveraging the inherent characteristics from potato, corn, tapioca and rice to help improve its customers’ product performance.

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