McCormick & Company, Incorporated (NYSE:MKC) and Calavo Growers (NASDAQ:CVGW) are both consumer staples companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, profitability, earnings, valuation, analyst recommendations, risk and institutional ownership.
Dividends
McCormick & Company, Incorporated pays an annual dividend of $1.36 per share and has a dividend yield of 1.6%. Calavo Growers pays an annual dividend of $1.15 per share and has a dividend yield of 1.5%. McCormick & Company, Incorporated pays out 50.9% of its earnings in the form of a dividend. Calavo Growers pays out 73.2% 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. McCormick & Company, Incorporated is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Ratings
This is a summary of current recommendations and price targets for McCormick & Company, Incorporated and Calavo Growers, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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McCormick & Company, Incorporated | 2 | 4 | 3 | 0 | 2.11 |
Calavo Growers | 0 | 3 | 1 | 0 | 2.25 |
McCormick & Company, Incorporated currently has a consensus target price of $81.5556, suggesting a potential downside of 3.86%. Calavo Growers has a consensus target price of $71.50, suggesting a potential downside of 9.52%. Given McCormick & Company, Incorporated's higher probable upside, research analysts clearly believe McCormick & Company, Incorporated is more favorable than Calavo Growers.
Institutional & Insider Ownership
37.5% of McCormick & Company, Incorporated shares are owned by institutional investors. Comparatively, 81.2% of Calavo Growers shares are owned by institutional investors. 11.0% of McCormick & Company, Incorporated shares are owned by company insiders. Comparatively, 6.3% of Calavo Growers shares are owned 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 and Valuation
This table compares McCormick & Company, Incorporated and Calavo Growers' gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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McCormick & Company, Incorporated | $5.35 billion | 4.21 | $702.70 million | $2.67 | 31.61 |
Calavo Growers | $1.06 billion | 1.32 | $-13,630,000.00 | $1.57 | 50.33 |
McCormick & Company, Incorporated has higher revenue and earnings than Calavo Growers. McCormick & Company, Incorporated is trading at a lower price-to-earnings ratio than Calavo Growers, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
McCormick & Company, Incorporated has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500. Comparatively, Calavo Growers has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500.
Profitability
This table compares McCormick & Company, Incorporated and Calavo Growers' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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McCormick & Company, Incorporated | 13.75% | 20.93% | 7.24% |
Calavo Growers | -1.29% | 9.86% | 5.96% |
Summary
McCormick & Company, Incorporated beats Calavo Growers on 13 of the 16 factors compared between the two stocks.