Critical Analysis: Archer Daniels Midland (NYSE:ADM) versus Dole (NYSE:DOLE)

Archer Daniels Midland (NYSE:ADM) and Dole (NYSE:DOLE) are both consumer staples companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Volatility and Risk

Archer Daniels Midland has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500. Comparatively, Dole has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.

Institutional and Insider Ownership

78.3% of Archer Daniels Midland shares are held by institutional investors. 0.7% of Archer Daniels Midland shares are held by company 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.

Analyst Recommendations

This is a summary of current ratings for Archer Daniels Midland and Dole, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Archer Daniels Midland	3	5	1	0	1.78
Dole	0	2	0	0	2.00

Archer Daniels Midland currently has a consensus target price of $54.50, indicating a potential downside of 19.83%. Dole has a consensus target price of $16.00, indicating a potential upside of 2.33%. Given Dole’s stronger consensus rating and higher possible upside, analysts clearly believe Dole is more favorable than Archer Daniels Midland.

Valuation and Earnings

This table compares Archer Daniels Midland and Dole”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Archer Daniels Midland	$83.21 billion	0.39	$1.80 billion	$2.45	27.75
Dole	$8.48 billion	0.18	$125.51 million	$0.15	104.23

Archer Daniels Midland has higher revenue and earnings than Dole. Archer Daniels Midland is trading at a lower price-to-earnings ratio than Dole, indicating that it is currently the more affordable of the two stocks.

Dividends

Archer Daniels Midland pays an annual dividend of $2.04 per share and has a dividend yield of 3.0%. Dole pays an annual dividend of $0.34 per share and has a dividend yield of 2.2%. Archer Daniels Midland pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Dole pays out 226.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Archer Daniels Midland has raised its dividend for 53 consecutive years and Dole has raised its dividend for 1 consecutive years. Archer Daniels Midland is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Archer Daniels Midland and Dole’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Archer Daniels Midland	1.43%	8.01%	3.40%
Dole	0.17%	7.98%	2.56%

Summary

Archer Daniels Midland beats Dole on 14 of the 17 factors compared between the two stocks.

About Archer Daniels Midland

Archer-Daniels-Midland Company engages in the procurement, transportation, storage, processing, and merchandising of agricultural commodities, ingredients, flavors, and solutions in the United States, Switzerland, the Cayman Islands, Brazil, Mexico, Canada, the United Kingdom, and internationally. It operates in three segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. The company originates, merchandises, stores, and transports agricultural raw materials, such as oilseeds and soft seeds. It also engages in the agricultural commodity and feed product import, export, and distribution; and various structured trade finance activities. In addition, the company offers soybean meal and oil; vegetable and salad oils and protein meals; ingredients for the food, feed, energy, and industrial customers; margarine, shortening, and other food products; and partially refined oils to produce biodiesel and glycols for use in chemicals, paints, and other industrial products. Further, it provides peanuts, peanut-derived ingredients, and cotton cellulose pulp; sweeteners, corn and wheat starches, syrup, glucose, wheat flour, and dextrose; alcohol, and other food and animal feed ingredients; ethyl alcohol and ethanol; corn gluten feed and meal; distillers' grains; corn germ; and citric acids. Additionally, the company provides proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, postbiotics, enzymes, and botanical extracts; and other specialty food and feed ingredients; edible beans; formula feeds, and animal health and nutrition products; and contract and private label pet treats and food products. It also offers futures commission merchant; commodity brokerage services; cash margins and securities pledged to commodity exchange clearinghouse; and cash pledged as security under certain insurance arrangements. The company was founded in 1902 and is headquartered in Chicago, Illinois.

About Dole

Dole Food Company, Inc. (Dole) is a producer, marketer and distributor of fresh fruit and fresh vegetables. The Company is a producer of bananas and pineapples, and packaged fruit products, packaged salads and fresh-packed vegetables. The Company has three business segments: fresh fruit, fresh vegetables and packaged foods. The fresh fruit segment contains operating divisions that produce and market fresh fruit to wholesale, retail and institutional customers worldwide. The fresh vegetables segment produces and markets fresh-packed and value-added vegetables and salads to wholesale, retail and institutional customers, primarily in North America and Europe. The packaged foods segment contains several operating divisions that produce and market packaged foods, including fruit, juices, frozen fruit and healthy snack foods. In November 2013, Dole Food Company, Inc announced that an investor group acquired the remaining 60.43% interest in the Company.