Flowers Foods (NYSE:FLO) and Hershey (NYSE:HSY) Financial Review

Hershey (NYSE:HSY) and Flowers Foods (NYSE:FLO) are both consumer staples companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, risk and profitability.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hershey	$11.69 billion	2.91	$883.26 million	$7.32	23.13
Flowers Foods	$5.26 billion	0.24	$83.82 million	$0.26	23.13

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Hershey and Flowers Foods, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hershey	0	16	6	0	2.27
Flowers Foods	3	4	0	0	1.57

Hershey presently has a consensus price target of $199.44, suggesting a potential upside of 17.78%. Flowers Foods has a consensus price target of $6.80, suggesting a potential upside of 13.05%. Given Hershey’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Hershey is more favorable than Flowers Foods.

Risk and Volatility

Hershey has a beta of 0.1, meaning that its share price is 90% less volatile than the S&P 500. Comparatively, Flowers Foods has a beta of 0.43, meaning that its share price is 57% less volatile than the S&P 500.

Dividends

Hershey pays an annual dividend of $5.81 per share and has a dividend yield of 3.4%. Flowers Foods pays an annual dividend of $0.50 per share and has a dividend yield of 8.3%. Hershey pays out 79.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Flowers Foods pays out 192.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hershey has raised its dividend for 15 consecutive years and Flowers Foods has raised its dividend for 24 consecutive years. Flowers Foods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Hershey and Flowers Foods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hershey	12.24%	31.92%	10.71%
Flowers Foods	1.06%	14.91%	4.72%

Institutional and Insider Ownership

58.0% of Hershey shares are held by institutional investors. Comparatively, 75.5% of Flowers Foods shares are held by institutional investors. 0.1% of Hershey shares are held by company insiders. Comparatively, 7.2% of Flowers Foods shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Hershey beats Flowers Foods on 12 of the 17 factors compared between the two stocks.

About Hershey

The Hershey Company, together with its subsidiaries, engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally. The company operates through three segments: North America Confectionery, North America Salty Snacks, and International. It offers chocolate and non-chocolate confectionery products; gum and mint refreshment products, including mints, chewing gums, and bubble gums; protein bars; pantry items, such as baking ingredients, toppings, beverages, and sundae syrups; and snack items comprising spreads, bars, snack bites, mixes, popcorn, and pretzels. The company provides its products primarily under the Hershey’s, Reese’s, Kisses, Jolly Rancher, Almond Joy, Brookside, barkTHINS, Cadbury, Good & Plenty, Heath, Kit Kat, Payday, Rolo, Twizzlers, Whoppers, York, Ice Breakers, Breath Savers, Bubble Yum, Lily’s, SkinnyPop, Pirates Booty, Dot’s Homestyle Pretzels, and ONE Bar brands, as well as under the Pelon Pelo Rico, IO-IO, and Sofit brands. It markets and sells its products to wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, and department stores. The company exports its products in approximately 80 countries worldwide. The Hershey Company was founded in 1894 and is headquartered in Hershey, Pennsylvania.

About Flowers Foods

Flowers Foods, Inc. produces and markets packaged bakery food products in the United States. Its principal products include fresh breads, buns, rolls, snack items, bagels, English muffins, and tortillas, as well as frozen breads and rolls under the Nature's Own, Dave's Killer Bread, Wonder, Canyon Bakehouse, Mrs. Freshley's, and Tastykake brand names. The company distributes its products through a direct-store-delivery distribution and a warehouse delivery system, as well as operates bakeries. Its customers include national and regional restaurants, institutions and foodservice distributors, and retail in-store bakeries; wholesale distributors; mass merchandisers, supermarkets, vending outlets, and convenience stores; quick-serve chains, food wholesalers, institutions, dollar stores, and vending companies; and public health care, military commissaries, and prisons, and other governmental institutions. The company was formerly known as Flowers Industries and changed its name to Flowers Foods, Inc. in 2001. Flowers Foods, Inc. was founded in 1919 and is headquartered in Thomasville, Georgia.