Cal-Maine Foods (NASDAQ:CALM) vs. Archer Daniels Midland (NYSE:ADM) Critical Review

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

Profitability

This table compares Archer Daniels Midland and Cal-Maine Foods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Archer Daniels Midland	2.16%	9.21%	3.95%
Cal-Maine Foods	10.88%	11.79%	10.06%

Dividends

Archer Daniels Midland pays an annual dividend of $2.08 per share and has a dividend yield of 2.5%. Cal-Maine Foods pays an annual dividend of $1.43 per share and has a dividend yield of 1.9%. Archer Daniels Midland pays out 57.0% of its earnings in the form of a dividend. Cal-Maine Foods pays out 21.8% 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. Archer Daniels Midland has increased its dividend for 53 consecutive years and Cal-Maine Foods has increased 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.

Valuation & Earnings

This table compares Archer Daniels Midland and Cal-Maine Foods”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Archer Daniels Midland	$80.27 billion	0.51	$1.08 billion	$3.65	23.19
Cal-Maine Foods	$2.91 billion	1.20	$316.68 million	$6.55	11.39

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

Insider and Institutional Ownership

78.3% of Archer Daniels Midland shares are held by institutional investors. Comparatively, 84.7% of Cal-Maine Foods shares are held by institutional investors. 0.6% of Archer Daniels Midland shares are held by company insiders. Comparatively, 3.6% of Cal-Maine Foods shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and target prices for Archer Daniels Midland and Cal-Maine Foods, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Archer Daniels Midland	1	5	1	1	2.25
Cal-Maine Foods	0	5	0	0	2.00

Archer Daniels Midland currently has a consensus price target of $79.67, indicating a potential downside of 5.90%. Cal-Maine Foods has a consensus price target of $94.71, indicating a potential upside of 26.91%. Given Cal-Maine Foods’ higher possible upside, analysts plainly believe Cal-Maine Foods is more favorable than Archer Daniels Midland.

Risk and Volatility

Archer Daniels Midland has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500. Comparatively, Cal-Maine Foods has a beta of 0.23, indicating that its share price is 77% less volatile than the S&P 500.

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 Cal-Maine Foods

Cal-Maine Foods, Inc., together with its subsidiaries, produces, grades, packages, markets, and distributes shell eggs. The company offers specialty shell eggs, such as nutritionally enhanced, cage free, organic, free-range, pasture-raised, and brown eggs under the Egg-Land's Best, Land O' Lakes, Farmhouse Eggs, Sunups, Sunny Meadow, and 4Grain brand names. It sells its products to various customers, including national and regional grocery store chains, club stores, independent supermarkets, foodservice distributors, and egg product consumers primarily in the southwestern, southeastern, mid-western, and mid-Atlantic regions of the United States. Cal-Maine Foods, Inc. was founded in 1957 and is headquartered in Ridgeland, Mississippi.