Critical Analysis: Conagra Brands (NYSE:CAG) & Cal-Maine Foods (NASDAQ:CALM)

Cal-Maine Foods (NASDAQ:CALM) and Conagra Brands (NYSE:CAG) are both mid-cap consumer staples companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, dividends, risk, analyst recommendations and earnings.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Cal-Maine Foods and Conagra Brands, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cal-Maine Foods	1	4	1	0	2.00
Conagra Brands	5	12	1	0	1.78

Cal-Maine Foods presently has a consensus price target of $84.17, suggesting a potential upside of 28.69%. Conagra Brands has a consensus price target of $14.07, suggesting a potential downside of 4.08%. Given Cal-Maine Foods’ stronger consensus rating and higher possible upside, equities analysts plainly believe Cal-Maine Foods is more favorable than Conagra Brands.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cal-Maine Foods	2.32%	2.21%	1.89%
Conagra Brands	-16.95%	11.46%	4.51%

Institutional & Insider Ownership

84.7% of Cal-Maine Foods shares are held by institutional investors. Comparatively, 83.8% of Conagra Brands shares are held by institutional investors. 3.6% of Cal-Maine Foods shares are held by company insiders. Comparatively, 0.3% of Conagra Brands shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Cal-Maine Foods and Conagra Brands”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cal-Maine Foods	$2.53 billion	1.21	$316.68 million	$1.17	55.90
Conagra Brands	$11.24 billion	0.62	-$1.92 billion	($3.98)	-3.68

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

Risk and Volatility

Cal-Maine Foods has a beta of 0.28, meaning that its stock price is 72% less volatile than the S&P 500. Comparatively, Conagra Brands has a beta of 0.02, meaning that its stock price is 98% less volatile than the S&P 500.

Dividends

Cal-Maine Foods pays an annual dividend of $1.42 per share and has a dividend yield of 2.2%. Conagra Brands pays an annual dividend of $0.70 per share and has a dividend yield of 4.8%. Cal-Maine Foods pays out 121.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Conagra Brands pays out -17.6% of its earnings in the form of a dividend. Cal-Maine Foods has increased its dividend for 1 consecutive years and Conagra Brands has increased 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.

Summary

Cal-Maine Foods beats Conagra Brands on 10 of the 16 factors compared between the two stocks.

About Cal-Maine Foods

Cal-Maine Foods, Inc. is an American producer and marketer of shell eggs. Founded in 1957 and headquartered in Ridgeland, Mississippi, the company raises laying hens and handles the grading, packaging, and distribution of eggs for retail and food-service customers. Its products include conventional, cage-free, free-range, organic, brown, and other specialty eggs. Cal-Maine sells eggs under its own labels and customer brands, and also markets products under licensed brands. The company serves customers across much of the United States, with operations and distribution focused primarily on the South, Southwest, and Midwest.

About Conagra Brands

Conagra Brands is a packaged-food company that develops, manufactures and markets products for retail, foodservice and other customers. Its offerings include frozen meals and vegetables, snacks, baking products, condiments, cooking ingredients and meat snacks. The company’s portfolio includes brands such as Birds Eye, Healthy Choice, Marie Callender’s, Duncan Hines, Slim Jim, Orville Redenbacher’s, Hunt’s, Banquet and Reddi-wip. Its products are sold primarily in the United States, as well as in international markets.