McCormick & Company, Incorporated (NYSE:MKC) and Lancaster Colony (NASDAQ:LANC) are both consumer staples companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, institutional ownership, analyst recommendations, risk and profitability.
Analyst Recommendations
This is a summary of current ratings and target prices for McCormick & Company, Incorporated and Lancaster Colony, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
McCormick & Company, Incorporated | 2 | 4 | 3 | 0 | 2.11 |
Lancaster Colony | 0 | 0 | 1 | 0 | 3.00 |
McCormick & Company, Incorporated currently has a consensus target price of $81.5556, suggesting a potential downside of 3.86%. Given McCormick & Company, Incorporated's higher possible upside, equities analysts clearly believe McCormick & Company, Incorporated is more favorable than Lancaster Colony.
Earnings & Valuation
This table compares McCormick & Company, Incorporated and Lancaster Colony's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
McCormick & Company, Incorporated | $5.35 billion | 4.21 | $702.70 million | $2.67 | 31.55 |
Lancaster Colony | $1.33 billion | 3.66 | $136.98 million | $4.93 | 35.97 |
McCormick & Company, Incorporated has higher revenue and earnings than Lancaster Colony. McCormick & Company, Incorporated is trading at a lower price-to-earnings ratio than Lancaster Colony, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares McCormick & Company, Incorporated and Lancaster Colony's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
McCormick & Company, Incorporated | 13.75% | 20.93% | 7.24% |
Lancaster Colony | 9.90% | 16.90% | 13.24% |
Risk and 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, Lancaster Colony has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500.
Insider and Institutional Ownership
37.5% of McCormick & Company, Incorporated shares are held by institutional investors. Comparatively, 54.6% of Lancaster Colony shares are held by institutional investors. 11.0% of McCormick & Company, Incorporated shares are held by company insiders. Comparatively, 31.7% of Lancaster Colony shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Dividends
McCormick & Company, Incorporated pays an annual dividend of $1.36 per share and has a dividend yield of 1.6%. Lancaster Colony pays an annual dividend of $3.00 per share and has a dividend yield of 1.7%. McCormick & Company, Incorporated pays out 50.9% of its earnings in the form of a dividend. Lancaster Colony pays out 60.9% 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. Lancaster Colony has increased its dividend for 26 consecutive years. Lancaster Colony is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
McCormick & Company, Incorporated beats Lancaster Colony on 9 of the 17 factors compared between the two stocks.