Head-To-Head Comparison: BAB (OTCMKTS:BABB) versus McCormick & Company, Incorporated (NYSE:MKC)

BAB (OTCMKTS:BABB) and McCormick & Company, Incorporated (NYSE:MKC) are both consumer staples companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, earnings, risk, institutional ownership and profitability.

Earnings & Valuation

This table compares BAB and McCormick & Company, Incorporated”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BAB	$3.44 million	1.91	$560,000.00	$0.08	11.31
McCormick & Company, Incorporated	$6.84 billion	1.89	$789.40 million	$2.93	16.44

McCormick & Company, Incorporated has higher revenue and earnings than BAB. BAB is trading at a lower price-to-earnings ratio than McCormick & Company, Incorporated, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares BAB and McCormick & Company, Incorporated’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BAB	16.25%	16.64%	11.66%
McCormick & Company, Incorporated	23.12%	13.29%	5.87%

Volatility and Risk

BAB has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500. Comparatively, McCormick & Company, Incorporated has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500.

Institutional and Insider Ownership

79.7% of McCormick & Company, Incorporated shares are owned by institutional investors. 33.7% of BAB shares are owned by insiders. Comparatively, 10.6% of McCormick & Company, Incorporated shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

BAB pays an annual dividend of $0.04 per share and has a dividend yield of 4.4%. McCormick & Company, Incorporated pays an annual dividend of $1.92 per share and has a dividend yield of 4.0%. BAB pays out 50.0% of its earnings in the form of a dividend. McCormick & Company, Incorporated pays out 65.5% 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. McCormick & Company, Incorporated has raised its dividend for 38 consecutive years. BAB is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for BAB and McCormick & Company, Incorporated, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BAB	0	0	0	0	0.00
McCormick & Company, Incorporated	1	6	6	0	2.38

McCormick & Company, Incorporated has a consensus target price of $64.27, indicating a potential upside of 33.41%. Given McCormick & Company, Incorporated’s stronger consensus rating and higher possible upside, analysts clearly believe McCormick & Company, Incorporated is more favorable than BAB.

Summary

McCormick & Company, Incorporated beats BAB on 10 of the 17 factors compared between the two stocks.

About BAB

BAB, Inc. franchises and licenses bagel and muffin retail units under the Big Apple Bagels (BAB), My Favorite Muffin (MFM), and SweetDuet (SD) trade names in the United States. It's BAB franchised brand includes daily baked bagels, flavored cream cheeses, premium coffees, gourmet bagel sandwiches, and other related products; and MFM brand comprises various freshly baked muffins and coffees, as well as units operating as My Favorite Muffin Your All Day Bakery Café features specialty bagel sandwiches and related products. The company's SD brand includes frozen yogurt products. BAB, Inc. was founded in 1993 and is based in Deerfield, Illinois.

About McCormick & Company, Incorporated

McCormick & Co., Inc. engages in the manufacturing, marketing, and distribution of spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. It operates through the Consumer and Flavor Solutions segments. The Consumer segment sells spices, seasonings, condiments, and sauces. The Flavor Solutions segment includes seasoning blends, spices and herbs, condiments, coating systems, and compound flavors. The company was founded by Willoughby M. McCormick in 1889 and is headquartered in Baltimore, MD.