Freshpet (NASDAQ: FRPT) and Kellogg’s (NYSE:K) are both consumer staples companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Analyst Ratings

This is a summary of recent recommendations and price targets for Freshpet and Kellogg’s, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Freshpet 0 4 3 0 2.43
Kellogg’s 3 8 6 0 2.18

Freshpet currently has a consensus price target of $19.67, indicating a potential upside of 1.37%. Kellogg’s has a consensus price target of $72.94, indicating a potential upside of 21.02%. Given Kellogg’s’ higher possible upside, analysts clearly believe Kellogg’s is more favorable than Freshpet.

Dividends

Kellogg’s pays an annual dividend of $2.16 per share and has a dividend yield of 3.6%. Freshpet does not pay a dividend. Kellogg’s pays out 53.5% of its earnings in the form of a dividend. Kellogg’s has increased its dividend for 13 consecutive years.

Valuation and Earnings

This table compares Freshpet and Kellogg’s’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Freshpet $156.38 million 4.36 -$4.26 million ($0.12) -161.67
Kellogg’s $12.92 billion 1.61 $1.27 billion $4.04 14.92

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

Risk & Volatility

Freshpet has a beta of 1.69, meaning that its stock price is 69% more volatile than the S&P 500. Comparatively, Kellogg’s has a beta of 0.45, meaning that its stock price is 55% less volatile than the S&P 500.

Insider & Institutional Ownership

73.4% of Freshpet shares are owned by institutional investors. Comparatively, 91.8% of Kellogg’s shares are owned by institutional investors. 6.8% of Freshpet shares are owned by company insiders. Comparatively, 1.4% of Kellogg’s shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Freshpet -2.73% -3.85% -3.27%
Kellogg’s 9.82% 70.35% 8.99%

Summary

Kellogg’s beats Freshpet on 12 of the 17 factors compared between the two stocks.

Freshpet Company Profile

Freshpet, Inc. manufactures and markets natural fresh products, refrigerated meals, and treats for dogs and cats in the United States, Canada, and the United Kingdom. The company sells its products under the Freshpet brand; and Dognation and Dog Joy labels through various classes of retail, including grocery, mass, club, pet specialty, and natural, as well as online. Freshpet, Inc. was incorporated in 2004 and is headquartered in Secaucus, New Jersey.

Kellogg’s Company Profile

Kellogg Company, together with its subsidiaries, manufactures and markets ready-to-eat cereal and convenience foods. The company operates through U.S. Morning Foods, U.S. Snacks, U.S. Specialty, North America Other, Europe, Latin America, and Asia Pacific segments. Its principal products include cookies, crackers, savory snacks, toaster pastries, cereal bars, granola bars and bites, fruit-flavored snacks, ready-to-eat cereals, frozen waffles, and veggie foods. The company offers its cereals and cereal bars under the Kellogg's brand, as well as under the Kashi and Bear Naked brand; frozen foods under the Eggo and Morningstar Farms brands; and cookies, crackers, crisps, and other convenience foods under the Kellogg's, Keebler, Cheez-It, Pringles, Murray, Austin, and Famous Amos brands. The company sells its products for retailers through direct sales forces, as well as use brokers and distributors in approximately 180 countries. Kellogg Company was founded in 1906 and is headquartered in Battle Creek, Michigan.

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