Bunge (NYSE: BG) and Kellogg (NYSE:K) are both mid-cap basic materials companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, dividends, risk, profitability, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

79.9% of Bunge shares are held by institutional investors. Comparatively, 89.7% of Kellogg shares are held by institutional investors. 1.3% of Bunge shares are held by company insiders. Comparatively, 1.3% of Kellogg shares are held 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.

Analyst Recommendations

This is a breakdown of recent recommendations for Bunge and Kellogg, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bunge 0 4 4 0 2.50
Kellogg 2 8 3 0 2.08

Bunge currently has a consensus target price of $81.86, indicating a potential upside of 23.80%. Kellogg has a consensus target price of $71.50, indicating a potential upside of 9.92%. Given Bunge’s stronger consensus rating and higher possible upside, equities analysts plainly believe Bunge is more favorable than Kellogg.

Earnings & Valuation

This table compares Bunge and Kellogg’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bunge $42.94 billion 0.22 $745.00 million $3.19 20.73
Kellogg $13.01 billion 1.73 $694.00 million $2.24 29.04

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

Profitability

This table compares Bunge and Kellogg’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bunge 1.06% 6.68% 2.26%
Kellogg 6.15% 73.92% 9.27%

Risk & Volatility

Bunge has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500. Comparatively, Kellogg has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500.

Dividends

Bunge pays an annual dividend of $1.84 per share and has a dividend yield of 2.8%. Kellogg pays an annual dividend of $2.16 per share and has a dividend yield of 3.3%. Bunge pays out 57.7% of its earnings in the form of a dividend. Kellogg pays out 96.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bunge has increased its dividend for 12 consecutive years and Kellogg has increased its dividend for 15 consecutive years. Kellogg is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Bunge beats Kellogg on 9 of the 16 factors compared between the two stocks.

About Bunge

Bunge Limited is an agribusiness and food company with integrated operations that stretch from the farm field to consumer foods. The Company operates through five segments: Agribusiness, Edible Oil Products, Milling Products, Sugar and Bioenergy, and Fertilizer. Its Agribusiness segment is an integrated, global business involved in the purchase, storage, transport, processing and sale of agricultural commodities and commodity products. Its edible oil products include packaged and bulk oils, shortenings, margarines, mayonnaise and other products derived from the vegetable oil refining process. Its milling products segment includes the production and sale of a range of wheat flours and bakery mixes. The Company is a producer and exporter of sugar. Through the Company’s operations in Argentina, it produces, blends and distributes a range of nitrogen, phosphate and potassium (NPK) fertilizers, including phosphate-based liquid and solid nitrogen fertilizers.

About Kellogg

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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