Archer Daniels Midland (NYSE:ADM) versus J. M. Smucker (NYSE:SJM) Critical Comparison

J. M. Smucker (NYSE:SJM) and Archer Daniels Midland (NYSE:ADM) are both large-cap consumer staples companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, valuation, profitability, earnings and risk.

Insider and Institutional Ownership

81.7% of J. M. Smucker shares are held by institutional investors. Comparatively, 78.3% of Archer Daniels Midland shares are held by institutional investors. 2.8% of J. M. Smucker shares are held by insiders. Comparatively, 0.6% of Archer Daniels Midland shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
J. M. Smucker	$9.05 billion	1.41	-$138.70 million	$2.14	55.90
Archer Daniels Midland	$80.27 billion	0.48	$1.08 billion	$3.65	21.86

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
J. M. Smucker	2.51%	19.85%	6.76%
Archer Daniels Midland	2.16%	9.21%	3.95%

Analyst Ratings

This is a summary of current ratings and price targets for J. M. Smucker and Archer Daniels Midland, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
J. M. Smucker	0	7	10	0	2.59
Archer Daniels Midland	1	5	2	0	2.12

J. M. Smucker currently has a consensus target price of $136.25, suggesting a potential upside of 13.90%. Archer Daniels Midland has a consensus target price of $79.67, suggesting a potential downside of 0.15%. Given J. M. Smucker’s stronger consensus rating and higher probable upside, analysts clearly believe J. M. Smucker is more favorable than Archer Daniels Midland.

Dividends

J. M. Smucker pays an annual dividend of $4.48 per share and has a dividend yield of 3.7%. Archer Daniels Midland pays an annual dividend of $2.08 per share and has a dividend yield of 2.6%. J. M. Smucker pays out 209.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Archer Daniels Midland pays out 57.0% of its earnings in the form of a dividend. J. M. Smucker has increased its dividend for 27 consecutive years and Archer Daniels Midland has increased its dividend for 53 consecutive years.

Risk & Volatility

J. M. Smucker has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500. Comparatively, Archer Daniels Midland has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500.

Summary

J. M. Smucker beats Archer Daniels Midland on 11 of the 17 factors compared between the two stocks.

About J. M. Smucker

The J. M. Smucker Company manufactures and markets branded food and beverage products worldwide. It operates in three segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S. Retail Consumer Foods. The company offers mainstream roast, ground, single serve, and premium coffee; peanut butter and specialty spreads; fruit spreads, toppings, and syrups; jelly products; nut mix products; shortening and oils; frozen sandwiches and snacks; pet food and pet snacks; and foodservice hot beverage, foodservice portion control, and flour products, as well as dog and cat food, frozen handheld products, juices and beverages, and baking mixes and ingredients. It provides its products under the Meow Mix, Milk-Bone, Pup-Peroni, Canine Carry Outs, Folgers, Café Bustelo, Dunkin', Folgers, Café Bustelo, 1850, Jif, Smucker's, Smucker's Uncrustables, Robin Hood, and Five Roses. The company sells its products through direct sales and brokers to food retailers, club stores, discount and dollar stores, online retailers, pet specialty stores, natural foods stores and distributors, drug stores, military commissaries, and mass merchandisers. Smucker Company was founded in 1897 and is headquartered in Orrville, Ohio.

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.