Contrasting Lamb Weston (NYSE:LW) and Tyson Foods (NYSE:TSN)

Lamb Weston (NYSE:LW) and Tyson Foods (NYSE:TSN) are both consumer staples companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, dividends, valuation and risk.

Volatility & Risk

Lamb Weston has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500. Comparatively, Tyson Foods has a beta of 0.38, meaning that its stock price is 62% less volatile than the S&P 500.

Insider and Institutional Ownership

89.6% of Lamb Weston shares are held by institutional investors. Comparatively, 67.0% of Tyson Foods shares are held by institutional investors. 1.0% of Lamb Weston shares are held by insiders. Comparatively, 2.1% of Tyson Foods shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for Lamb Weston and Tyson Foods, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lamb Weston	0	10	3	1	2.36
Tyson Foods	1	6	5	0	2.33

Lamb Weston currently has a consensus price target of $53.82, indicating a potential downside of 5.23%. Tyson Foods has a consensus price target of $66.78, indicating a potential upside of 11.52%. Given Tyson Foods’ higher possible upside, analysts clearly believe Tyson Foods is more favorable than Lamb Weston.

Profitability

This table compares Lamb Weston and Tyson Foods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lamb Weston	3.85%	23.27%	5.70%
Tyson Foods	1.03%	7.77%	3.94%

Dividends

Lamb Weston pays an annual dividend of $1.52 per share and has a dividend yield of 2.7%. Tyson Foods pays an annual dividend of $2.04 per share and has a dividend yield of 3.4%. Lamb Weston pays out 83.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tyson Foods pays out 125.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lamb Weston has increased its dividend for 7 consecutive years and Tyson Foods has increased its dividend for 13 consecutive years. Tyson Foods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Lamb Weston and Tyson Foods”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lamb Weston	$6.61 billion	1.18	$290.00 million	$1.83	31.03
Tyson Foods	$55.69 billion	0.38	$474.00 million	$1.62	36.96

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

Summary

Lamb Weston beats Tyson Foods on 10 of the 18 factors compared between the two stocks.

About Lamb Weston

Lamb Weston Holdings, Inc. is a food company that produces and markets frozen potato products. Its offerings include French fries, sweet potato products and other potato-based sides and appetizers. The company serves foodservice customers, including restaurants and other commercial food providers, as well as retail customers through grocery stores and other channels. Its products are sold in North America and international markets. Lamb Weston traces its roots to a potato-processing business founded by Gilbert Lamb in 1950 in Weston, Oregon.

About Tyson Foods

Tyson Foods, Inc. is a food company focused on protein production and prepared foods. Its businesses include chicken, beef and pork products, as well as ready-to-eat and other prepared foods sold to retail customers, food-service operators and industrial buyers. The company’s products are marketed under brands including Tyson, Jimmy Dean, Hillshire Farm, Ball Park and Wright. Offerings range from fresh and frozen meat to deli products, sausages, bacon and prepared meals. Founded in 1935 by John W. Tyson, the company is headquartered in Springdale, Arkansas.