MGP Ingredients (MGPI) and Darling Ingredients (DAR) Critical Analysis

MGP Ingredients (NASDAQ: MGPI) and Darling Ingredients (NYSE:DAR) are both non-cyclical consumer goods & services companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for MGP Ingredients and Darling Ingredients, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MGP Ingredients 0 1 3 0 2.75
Darling Ingredients 0 1 4 0 2.80

MGP Ingredients currently has a consensus price target of $80.00, suggesting a potential downside of 4.09%. Darling Ingredients has a consensus price target of $19.40, suggesting a potential upside of 8.87%. Given Darling Ingredients’ stronger consensus rating and higher possible upside, analysts plainly believe Darling Ingredients is more favorable than MGP Ingredients.

Volatility and Risk

MGP Ingredients has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500. Comparatively, Darling Ingredients has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500.

Valuation and Earnings

This table compares MGP Ingredients and Darling Ingredients’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MGP Ingredients $328.08 million 4.25 $31.18 million $2.18 38.26
Darling Ingredients $3.40 billion 0.86 $102.31 million $0.39 45.69

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

Institutional & Insider Ownership

98.6% of MGP Ingredients shares are held by institutional investors. Comparatively, 97.5% of Darling Ingredients shares are held by institutional investors. 23.5% of MGP Ingredients shares are held by insiders. Comparatively, 2.0% of Darling Ingredients shares are held by 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.

Dividends

MGP Ingredients pays an annual dividend of $0.16 per share and has a dividend yield of 0.2%. Darling Ingredients does not pay a dividend. MGP Ingredients pays out 7.3% of its earnings in the form of a dividend.

Profitability

This table compares MGP Ingredients and Darling Ingredients’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MGP Ingredients 10.56% 18.70% 12.39%
Darling Ingredients 1.76% 2.96% 1.32%

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.

About Darling Ingredients

Darling Ingredients Inc. (Darling) is a developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a range of ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy and fertilizer industries. The Company operates through three segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. The Company collects and transforms all aspects of animal by-product streams into useable and specialty ingredients, such as gelatin, edible fats, feed-grade fats, animal proteins and meals, plasma, pet food ingredients, organic fertilizers, yellow grease, fuel feedstocks, green energy, natural casings and hides. In addition, the Company provides grease trap services to food service establishments, environmental services to food processors and sells restaurant cooking oil delivery and collection equipment.

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