Head to Head Review: Smithfield Foods (NASDAQ:SFD) and Conagra Brands (NYSE:CAG)

Smithfield Foods (NASDAQ:SFD) and Conagra Brands (NYSE:CAG) are both mid-cap consumer staples companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, valuation, earnings, profitability and risk.

Volatility & Risk

Smithfield Foods has a beta of -0.41, suggesting that its stock price is 141% less volatile than the S&P 500. Comparatively, Conagra Brands has a beta of 0.02, suggesting that its stock price is 98% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Smithfield Foods and Conagra Brands, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smithfield Foods	1	3	3	0	2.29
Conagra Brands	5	12	1	0	1.78

Smithfield Foods currently has a consensus price target of $26.00, indicating a potential upside of 41.84%. Conagra Brands has a consensus price target of $14.07, indicating a potential downside of 1.18%. Given Smithfield Foods’ stronger consensus rating and higher possible upside, analysts plainly believe Smithfield Foods is more favorable than Conagra Brands.

Dividends

Smithfield Foods pays an annual dividend of $1.25 per share and has a dividend yield of 6.8%. Conagra Brands pays an annual dividend of $0.70 per share and has a dividend yield of 4.9%. Smithfield Foods pays out 46.6% of its earnings in the form of a dividend. Conagra Brands pays out -17.6% 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. Conagra Brands has raised its dividend for 5 consecutive years.

Earnings and Valuation

This table compares Smithfield Foods 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
Smithfield Foods	$15.47 billion	0.47	$1.06 billion	$2.68	6.84
Conagra Brands	$11.24 billion	0.60	-$1.90 billion	($3.98)	-3.58

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Smithfield Foods	N/A	N/A	N/A
Conagra Brands	N/A	N/A	N/A

Institutional & Insider Ownership

83.8% of Conagra Brands shares are held by institutional investors. 1.8% of Smithfield Foods shares are held by insiders. Comparatively, 0.3% 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.

Summary

Smithfield Foods beats Conagra Brands on 9 of the 14 factors compared between the two stocks.

About Smithfield Foods

Smithfield Foods, Inc. produces and markets a variety of fresh meat and packaged meats products both domestically and internationally. The Company operates in four segments: Pork, Hog Production, International and Corporate, each of which consists of a number of subsidiaries, joint ventures and other investments. The Pork segment consists mainly of its three wholly owned United States fresh pork and packaged meats subsidiaries: The Smithfield Packing Company, Inc. (Smithfield Packing), Farmland Foods, Inc. (Farmland Foods) and John Morrell Food Group (John Morrell). The Hog Production segment consists of the Company’s hog production operations located in the United States. On September 2012 (fiscal 2013), the Company acquired a 70% controlling interest in American Skin Food Group, LLC. Effective September 26, 2013, Shuanghui International Holdings Ltd merged with Smithfield Foods Inc, a producer and wholesaler of pork meat products.

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.