Critical Survey: Ingredion (INGR) vs. General Mills (GIS)

Ingredion (NYSE: INGR) and General Mills (NYSE:GIS) are both large-cap non-cyclical consumer goods & services companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, dividends, earnings and risk.

Dividends

Ingredion pays an annual dividend of $2.40 per share and has a dividend yield of 1.7%. General Mills pays an annual dividend of $1.96 per share and has a dividend yield of 3.3%. Ingredion pays out 34.3% of its earnings in the form of a dividend. General Mills pays out 71.8% 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. Ingredion has raised its dividend for 5 consecutive years and General Mills has raised its dividend for 13 consecutive years. General Mills is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Ingredion and General Mills’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ingredion $5.70 billion 1.77 $485.00 million $6.99 20.15
General Mills $15.62 billion 2.16 $1.66 billion $2.73 21.76

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

Profitability

This table compares Ingredion and General Mills’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ingredion 8.73% 20.92% 9.68%
General Mills 10.29% 38.89% 7.95%

Volatility and Risk

Ingredion has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, General Mills has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500.

Institutional & Insider Ownership

84.5% of Ingredion shares are held by institutional investors. Comparatively, 72.7% of General Mills shares are held by institutional investors. 1.9% of Ingredion shares are held by company insiders. Comparatively, 1.4% of General Mills 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 Ratings

This is a breakdown of current ratings and target prices for Ingredion and General Mills, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ingredion 0 1 3 0 2.75
General Mills 2 14 2 0 2.00

Ingredion currently has a consensus price target of $138.33, indicating a potential downside of 1.79%. General Mills has a consensus price target of $58.07, indicating a potential downside of 2.25%. Given Ingredion’s stronger consensus rating and higher possible upside, research analysts clearly believe Ingredion is more favorable than General Mills.

Summary

Ingredion beats General Mills on 9 of the 17 factors compared between the two stocks.

About Ingredion

Ingredion Incorporated is an ingredients solutions provider. The Company manufactures and sells sweetener, starches, nutrition ingredients and biomaterial solutions derived from the wet milling and processing of corn and other starch-based materials to a range of industries, both domestically and internationally. It operates through four segments: North America, South America, Asia Pacific, and Europe, Middle East and Africa (EMEA). It turns corn, tapioca, potatoes, and other vegetables and fruits into ingredients and biomaterials for the food, beverage, paper and corrugating, brewing and other industries. Its product line includes animal feed products and edible corn oil. Its sweetener products include glucose syrups, high maltose syrup, high fructose corn syrup (HFCS), caramel color, dextrose, polyols, maltodextrins and glucose and syrup solids. Its starch-based products include both food-grade and industrial starches, and biomaterials. It also offers specialty ingredients.

About General Mills

General Mills, Inc. is a manufacturer and marketer of branded consumer foods sold through retail stores. The Company is a supplier of branded and unbranded food products to the North American foodservice and commercial baking industries. The Company has three segments: U.S. Retail, International, and Convenience Stores and Foodservice. Its products are marketed under various brands, which include Annie’s and Betty Crocker. The Company’s U.S. Retail segment reflects business with a range of grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains, and e-commerce grocery providers operating throughout the United States. The International segment consists of retail and foodservice businesses outside of the United States. The Convenience Stores and Foodservice segment’s product categories include ready-to-eat cereals, snacks, refrigerated yogurt, frozen meals, unbaked and fully baked frozen dough products, and baking mixes.

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