Head-To-Head Analysis: Nomad Foods (NYSE:NOMD) versus Smithfield Foods (NASDAQ:SFD)

Nomad Foods (NYSE:NOMD) and Smithfield Foods (NASDAQ:SFD) are both consumer staples companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, profitability and risk.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Nomad Foods and Smithfield Foods, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nomad Foods	1	2	4	0	2.43
Smithfield Foods	3	1	3	0	2.00

Nomad Foods currently has a consensus target price of $13.80, suggesting a potential upside of 18.41%. Smithfield Foods has a consensus target price of $24.67, suggesting a potential upside of 28.87%. Given Smithfield Foods’ higher possible upside, analysts plainly believe Smithfield Foods is more favorable than Nomad Foods.

Institutional & Insider Ownership

75.3% of Nomad Foods shares are owned by institutional investors. 1.8% of Smithfield Foods shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Nomad Foods has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500. Comparatively, Smithfield Foods has a beta of -0.39, suggesting that its stock price is 139% less volatile than the S&P 500.

Earnings & Valuation

This table compares Nomad Foods and Smithfield Foods”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nomad Foods	$2.98 billion	0.55	$154.66 million	$1.10	10.59
Smithfield Foods	$15.53 billion	0.49	$987.00 million	$2.28	8.39

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

Dividends

Nomad Foods pays an annual dividend of $0.68 per share and has a dividend yield of 5.8%. Smithfield Foods pays an annual dividend of $1.25 per share and has a dividend yield of 6.5%. Nomad Foods pays out 61.8% of its earnings in the form of a dividend. Smithfield Foods pays out 54.8% 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. Nomad Foods has raised its dividend for 2 consecutive years. Smithfield Foods is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Nomad Foods and Smithfield Foods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nomad Foods	4.46%	8.63%	3.42%
Smithfield Foods	5.94%	13.41%	7.68%

Summary

Smithfield Foods beats Nomad Foods on 10 of the 17 factors compared between the two stocks.

About Nomad Foods

Nomad Foods Limited is a frozen-food company focused on European markets. It sells products including frozen fish, vegetables, meals, and poultry under brands such as Birds Eye, iglo, Findus, and Aunt Bessie’s. The company was formed in 2014 and expanded through acquisitions, including the purchase of the Iglo Group in 2015. Its products are sold across multiple European countries through grocery retailers and other food channels.

About Smithfield Foods

Smithfield Foods is a U.S.-based food company focused on pork production and packaged meats. Its operations span hog farming, meat processing and the manufacture and marketing of fresh pork and prepared foods. The company sells products under brands including Smithfield, Eckrich, Farmland, Armour and Cook’s. Its offerings include fresh pork, bacon, ham, sausage, hot dogs and other packaged meat products for retail, food-service and wholesale customers. Founded in 1936 in Smithfield, Virginia, the company has grown from a regional meat processor into a major pork producer.