Mondelez International (NASDAQ:MDLZ) and McCormick & Company, Incorporated (NYSE:MKC) are both large-cap consumer staples companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitability, analyst recommendations, dividends, earnings and institutional ownership.
Dividends
Mondelez International pays an annual dividend of $1.26 per share and has a dividend yield of 2.2%. McCormick & Company, Incorporated pays an annual dividend of $1.36 per share and has a dividend yield of 1.5%. Mondelez International pays out 51.0% of its earnings in the form of a dividend. McCormick & Company, Incorporated pays out 50.9% 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. Mondelez International has raised its dividend for 8 consecutive years. Mondelez International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Mondelez International has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, McCormick & Company, Incorporated has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500.
Profitability
This table compares Mondelez International and McCormick & Company, Incorporated's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Mondelez International | 11.99% | 13.92% | 5.72% |
McCormick & Company, Incorporated | 13.75% | 20.93% | 7.24% |
Valuation & Earnings
This table compares Mondelez International and McCormick & Company, Incorporated's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Mondelez International | $25.87 billion | 3.11 | $3.87 billion | $2.47 | 22.81 |
McCormick & Company, Incorporated | $5.35 billion | 4.57 | $702.70 million | $2.67 | 34.34 |
Mondelez International has higher revenue and earnings than McCormick & Company, Incorporated. Mondelez International is trading at a lower price-to-earnings ratio than McCormick & Company, Incorporated, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of current ratings and price targets for Mondelez International and McCormick & Company, Incorporated, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Mondelez International | 0 | 1 | 17 | 0 | 2.94 |
McCormick & Company, Incorporated | 2 | 4 | 3 | 0 | 2.11 |
Mondelez International presently has a consensus price target of $63.4118, indicating a potential upside of 12.49%. McCormick & Company, Incorporated has a consensus price target of $81.5556, indicating a potential downside of 11.01%. Given Mondelez International's stronger consensus rating and higher probable upside, research analysts clearly believe Mondelez International is more favorable than McCormick & Company, Incorporated.
Insider & Institutional Ownership
75.1% of Mondelez International shares are held by institutional investors. Comparatively, 37.5% of McCormick & Company, Incorporated shares are held by institutional investors. 1.3% of Mondelez International shares are held by company insiders. Comparatively, 11.0% of McCormick & Company, Incorporated shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Summary
Mondelez International beats McCormick & Company, Incorporated on 9 of the 17 factors compared between the two stocks.