Critical Comparison: Ajinomoto (OTCMKTS:AJINY) versus Conagra Brands (NYSE:CAG)

Ajinomoto (OTCMKTS:AJINY) and Conagra Brands (NYSE:CAG) are both consumer staples companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, valuation, institutional ownership, analyst recommendations, earnings, risk and dividends.

Institutional and Insider Ownership

83.8% of Conagra Brands shares are held by institutional investors. 0.6% of Conagra Brands shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Ajinomoto and Conagra Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ajinomoto	N/A	N/A	N/A
Conagra Brands	7.42%	11.72%	4.95%

Volatility and Risk

Ajinomoto has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500. Comparatively, Conagra Brands has a beta of 0.03, indicating that its stock price is 97% less volatile than the S&P 500.

Dividends

Ajinomoto pays an annual dividend of $0.19 per share and has a dividend yield of 0.7%. Conagra Brands pays an annual dividend of $1.40 per share and has a dividend yield of 8.4%. Ajinomoto pays out 24.7% of its earnings in the form of a dividend. Conagra Brands pays out 79.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Conagra Brands has raised its dividend for 5 consecutive years. Conagra Brands is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Ajinomoto and Conagra Brands, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ajinomoto	0	1	0	2	3.33
Conagra Brands	3	10	1	0	1.86

Conagra Brands has a consensus price target of $21.92, indicating a potential upside of 31.28%. Given Conagra Brands’ higher probable upside, analysts clearly believe Conagra Brands is more favorable than Ajinomoto.

Valuation & Earnings

This table compares Ajinomoto and Conagra Brands”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ajinomoto	$10.05 billion	2.65	$463.80 million	$0.77	34.71
Conagra Brands	$11.45 billion	0.70	$1.15 billion	$1.76	9.49

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

Summary

Conagra Brands beats Ajinomoto on 12 of the 18 factors compared between the two stocks.

About Ajinomoto

Ajinomoto Co., Inc. engages in the seasonings and foods, frozen foods, and healthcare and other businesses in Japan and internationally. The Seasonings and Foods segment offers sauces and seasoning products under the AJI-NO-MOTO, HON-DASHI, Cook Do, Ajinomoto KK Consommé, Pure Select Mayonnaise, Ros Dee, Masako, Aji-ngon, Sazón, Sajiku, and CRISPY FRY names; and solutions and ingredients for foodservice and processed food manufacturers, processed foods, and restaurants, as well as industrial, retail, and other applications. This segment also provides instant noodles under the Knorr Cup Soup and YumYum names; coffee beverages under the Birdy and Blendy brands; powdered drink under the Birdy 3in1 name; MAXIM brand products; Chyotto Zeitakuna Kohiten brand products; and gift sets and office supplies comprising coffee vending machines, tea servers, etc. The Frozen Foods segment offers Chinese dumplings, cooked rice, noodles, desserts, shumai, processed chicken, and other products under the AJINOMOTO FRESH FROZEN, Bernardi, FRED’S, Golden Tiger, José Olé, LingLing, POSADA, and TAI PEI brands. The Healthcare and Other segment provides amino acids for applications in various industries, such as pharmaceuticals and foods; contract development and manufacturing services for pharmaceutical intermediates and active ingredients, aseptic fill finish services, etc.; personal care ingredients; and medical foods, crop services, etc. This segment also offers Ajinomoto Build-up Film, an interlayer insulating material for semiconductor packages; fundamental foods under the Glyna and Amino Aile names; sports nutrition supplements under the amino VITAL brand; and functional materials, such as activated carbon, release paper, etc. Ajinomoto Co., Inc. was founded in 1909 and is headquartered in Tokyo, Japan.

About Conagra Brands

Conagra Brands, Inc., together with its subsidiaries, operates as a consumer packaged goods food company primarily in the United States. The company operates through Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice segments. The Grocery & Snacks segment primarily offers shelf stable food products through various retail channels. The Refrigerated & Frozen segment provides temperature-controlled food products through various retail channels. The International segment offers food products in various temperature states through retail and foodservice channels outside of the United States. The Foodservice segment offers branded and customized food products, including meals, entrees, sauces, and various custom-manufactured culinary products packaged for restaurants and other foodservice establishments. The company sells its products under the Birds Eye, Marie Callender's, Duncan Hines, Healthy Choice, Slim Jim, Reddi-wip, Angie's, BOOMCHICKAPOP, Duke's, Earth Balance, Gardein, and Frontera brands. The company was incorporated in 1919 and is headquartered in Chicago, Illinois.