Conagra Brands (NYSE:CAG) & Marzetti (NASDAQ:MZTI) Critical Analysis

Marzetti (NASDAQ:MZTI) and Conagra Brands (NYSE:CAG) are both mid-cap consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of recent recommendations for Marzetti and Conagra Brands, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Marzetti	1	2	1	0	2.00
Conagra Brands	6	11	1	0	1.72

Marzetti currently has a consensus price target of $169.33, indicating a potential upside of 58.45%. Conagra Brands has a consensus price target of $14.07, indicating a potential downside of 3.16%. Given Marzetti’s stronger consensus rating and higher probable upside, equities analysts plainly believe Marzetti is more favorable than Conagra Brands.

Volatility and Risk

Marzetti has a beta of 0.32, suggesting that its share price is 68% less volatile than the S&P 500. Comparatively, Conagra Brands has a beta of -0.02, suggesting that its share price is 102% less volatile than the S&P 500.

Profitability

This table compares Marzetti and Conagra Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Marzetti	9.06%	18.12%	14.01%
Conagra Brands	-16.99%	10.44%	4.27%

Insider & Institutional Ownership

66.4% of Marzetti shares are owned by institutional investors. Comparatively, 83.8% of Conagra Brands shares are owned by institutional investors. 29.1% of Marzetti shares are owned by insiders. Comparatively, 0.6% of Conagra Brands shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Marzetti pays an annual dividend of $4.00 per share and has a dividend yield of 3.7%. Conagra Brands pays an annual dividend of $0.70 per share and has a dividend yield of 4.8%. Marzetti pays out 62.6% of its earnings in the form of a dividend. Conagra Brands pays out -17.5% 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. Marzetti has increased its dividend for 62 consecutive years and Conagra Brands has increased its dividend for 5 consecutive years. Conagra Brands is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Marzetti and Conagra Brands”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Marzetti	$1.91 billion	1.53	$167.35 million	$6.39	16.72
Conagra Brands	$11.28 billion	0.62	-$1.92 billion	($4.00)	-3.63

Marzetti has higher earnings, but lower revenue than Conagra Brands. Conagra Brands is trading at a lower price-to-earnings ratio than Marzetti, indicating that it is currently the more affordable of the two stocks.

Summary

Marzetti beats Conagra Brands on 12 of the 16 factors compared between the two stocks.

About Marzetti

Lancaster Colony Corporation engages in the manufacturing and marketing of specialty food products for the retail and foodservice channels in the United States. It operates in two segments, Retail and Foodservice. The company offers frozen garlic bread under the New York BRAND Bakery; frozen Parkerhouse style yeast and dinner rolls under the Sister Schubert's brand; salad dressings under the Marzetti, Simply Dressed, Cardini's, and Girard's brands; vegetable and fruit dips under the Marzetti brand; croutons and salad toppings under the New York BRAND Bakery, Chatham Village, and Marzetti brands; and frozen pasta under the Marzetti Frozen Pasta brand. It also manufactures and sells other products to brand license agreements, including Olive Garden dressings, Buffalo Wild Wings sauces, and Chick-fil-A sauces. The company sells its products through sales personnel, food brokers, and distributors to retailers and restaurants. Lancaster Colony Corporation was incorporated in 1961 and is based in Westerville, Ohio.

About Conagra Brands

Conagra Brands, Inc., together with its subsidiaries, operates as a consumer packaged goods food company primarily in the United States. The company operates through Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice segments. The Grocery & Snacks segment primarily offers shelf stable food products through various retail channels. The Refrigerated & Frozen segment provides temperature-controlled food products through various retail channels. The International segment offers food products in various temperature states through retail and foodservice channels outside of the United States. The Foodservice segment offers branded and customized food products, including meals, entrees, sauces, and various custom-manufactured culinary products packaged for restaurants and other foodservice establishments. The company sells its products under the Birds Eye, Marie Callender's, Duncan Hines, Healthy Choice, Slim Jim, Reddi-wip, Angie's, BOOMCHICKAPOP, Duke's, Earth Balance, Gardein, and Frontera brands. The company was incorporated in 1919 and is headquartered in Chicago, Illinois.