Financial Comparison: Hormel Foods (NYSE:HRL) vs. J. M. Smucker (NYSE:SJM)

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

Insider and Institutional Ownership

81.7% of J. M. Smucker shares are owned by institutional investors. Comparatively, 41.0% of Hormel Foods shares are owned by institutional investors. 2.8% of J. M. Smucker shares are owned by insiders. Comparatively, 0.6% of Hormel Foods shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

J. M. Smucker has a beta of 0.25, meaning that its stock price is 75% less volatile than the S&P 500. Comparatively, Hormel Foods has a beta of 0.34, meaning that its stock price is 66% less volatile than the S&P 500.

Profitability

This table compares J. M. Smucker and Hormel Foods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
J. M. Smucker	-1.53%	17.18%	5.76%
Hormel Foods	3.82%	9.74%	5.81%

Analyst Recommendations

This is a breakdown of recent recommendations for J. M. Smucker and Hormel Foods, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
J. M. Smucker	0	9	9	0	2.50
Hormel Foods	0	7	2	0	2.22

J. M. Smucker currently has a consensus target price of $123.40, suggesting a potential upside of 1.61%. Hormel Foods has a consensus target price of $26.57, suggesting a potential upside of 8.43%. Given Hormel Foods’ higher possible upside, analysts clearly believe Hormel Foods is more favorable than J. M. Smucker.

Dividends

J. M. Smucker pays an annual dividend of $4.48 per share and has a dividend yield of 3.7%. Hormel Foods pays an annual dividend of $1.17 per share and has a dividend yield of 4.8%. J. M. Smucker pays out -344.6% of its earnings in the form of a dividend. Hormel Foods pays out 137.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. J. M. Smucker has raised its dividend for 27 consecutive years and Hormel Foods has raised its dividend for 60 consecutive years. Hormel Foods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares J. M. Smucker 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
J. M. Smucker	$9.05 billion	1.43	-$138.70 million	($1.30)	-93.42
Hormel Foods	$12.11 billion	1.11	$478.20 million	$0.85	28.83

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

Summary

Hormel Foods beats J. M. Smucker on 10 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 Hormel Foods

Hormel Foods Corporation develops, processes, and distributes various meat, nuts, and other food products to retail, foodservice, deli, and commercial customers in the United States and internationally. It operates through three segments: Retail, Foodservice, and International segments. The company provides various perishable products that include fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles, and bacons; and shelf-stable products comprising canned luncheon meats, nut butters, snack nuts, chili, shelf-stable microwaveable meals, hash, stews, tortillas, salsas, tortilla chips, nutritional food supplements, and others. It sells its products under the HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, BURKE, CAFÉ H, CERATTI, CHI-CHI'S, COLUMBUS, COMPLEATS, CORN NUTS, CURE 81, DAN'S PRIZE, DI LUSSO, DINTY MOORE, DON MIGUEL, DOÑA MARIA, EMBASA, FAST N EASY, FIRE BRAISED, FONTANINI, HAPPY LITTLE PLANTS, HERDEZ, HORMEL GATHERINGS, HORMEL SQUARE TABLE, HORMEL VITAL CUISINE, HOUSE OF TSANG, JENNIE-O, JUSTIN'S, LA VICTORIA, LAYOUT, LLOYD'S, MARY KITCHEN, MR. PEANUT, NATURAL CHOICE, NUT-RITION, OLD SMOKEHOUSE, OVEN READY, PILLOW PACK, PLANTERS, ROSA GRANDE, SADLER'S SMOKEHOUSE, SKIPPY, SPAM, SPECIAL RECIPE, THICK & EASY, VALLEY FRESH, AND WHOLLY brands through sales personnel, independent brokers, and distributors. The company was formerly known as Geo. A. Hormel & Company and changed its name to Hormel Foods Corporation in January 1995. Hormel Foods Corporation was founded in 1891 and is headquartered in Austin, Minnesota.