Critical Comparison: Lifeway Foods (NASDAQ:LWAY) versus Hormel Foods (NYSE:HRL)

Lifeway Foods (NASDAQ:LWAY) and Hormel Foods (NYSE:HRL) are both consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, earnings, analyst recommendations, dividends and profitability.

Valuation and Earnings

This table compares Lifeway Foods and Hormel Foods”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lifeway Foods	$212.50 million	1.58	$13.86 million	$0.70	31.80
Hormel Foods	$12.11 billion	1.01	$478.20 million	$0.63	35.21

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

Volatility and Risk

Lifeway Foods has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500. Comparatively, Hormel Foods has a beta of 0.27, indicating that its share price is 73% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Lifeway Foods and Hormel Foods, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lifeway Foods	0	1	2	1	3.00
Hormel Foods	1	6	1	0	2.00

Lifeway Foods presently has a consensus target price of $34.00, suggesting a potential upside of 52.74%. Hormel Foods has a consensus target price of $25.43, suggesting a potential upside of 14.63%. Given Lifeway Foods’ stronger consensus rating and higher probable upside, analysts plainly believe Lifeway Foods is more favorable than Hormel Foods.

Insider & Institutional Ownership

36.4% of Lifeway Foods shares are held by institutional investors. Comparatively, 41.0% of Hormel Foods shares are held by institutional investors. 18.6% of Lifeway Foods shares are held by insiders. Comparatively, 0.6% of Hormel Foods shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Lifeway Foods and Hormel Foods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lifeway Foods	4.48%	12.66%	9.29%
Hormel Foods	2.82%	9.91%	5.89%

Summary

Lifeway Foods beats Hormel Foods on 11 of the 15 factors compared between the two stocks.

About Lifeway Foods

Lifeway Foods, Inc. is a U.S.-based food company that produces and markets cultured and probiotic dairy products. Its portfolio is centered on kefir, a fermented milk beverage available in a variety of flavors and formats, including low-fat, whole-milk, organic and lactose-free options. The company also offers drinkable yogurt, sour cream, farmer cheese, cream cheese and other cultured dairy products. Through its Green Valley Creamery brand, Lifeway markets lactose-free organic kefir and related dairy products, while its products are sold through grocery stores, natural and specialty food retailers, club stores, mass merchandise channels and e-commerce platforms.

About Hormel Foods

Hormel Foods Corporation is a branded food company that produces and markets meat and other food products for retail, foodservice and other customers. Its offerings include pork, turkey and other meat products, as well as refrigerated and shelf-stable foods. The company’s brands include Hormel, SPAM, Jennie-O, Skippy, Applegate and Planters. Its products are sold in the United States and in international markets. Founded in 1891 by George A. Hormel in Austin, Minnesota, the company has grown from a local meatpacking business into a diversified food producer.