Constellation Brands (NYSE:STZ) and Lamb Weston (NYSE:LW) are both large-cap consumer staples companies, but which is the better business? We will compare the two companies based on the strength of their profitability, analyst recommendations, dividends, earnings, risk, valuation and institutional ownership.
Analyst Ratings
This is a summary of current ratings and recommmendations for Constellation Brands and Lamb Weston, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Constellation Brands | 0 | 9 | 11 | 1 | 2.62 |
Lamb Weston | 0 | 3 | 2 | 0 | 2.40 |
Constellation Brands currently has a consensus target price of $227.5238, suggesting a potential upside of 4.84%. Lamb Weston has a consensus target price of $65.20, suggesting a potential downside of 24.01%. Given Constellation Brands' stronger consensus rating and higher probable upside, equities analysts plainly believe Constellation Brands is more favorable than Lamb Weston.
Profitability
This table compares Constellation Brands and Lamb Weston's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Constellation Brands | 21.63% | 16.09% | 7.41% |
Lamb Weston | 8.33% | 95.26% | 7.20% |
Insider & Institutional Ownership
71.9% of Constellation Brands shares are held by institutional investors. Comparatively, 86.4% of Lamb Weston shares are held by institutional investors. 15.8% of Constellation Brands shares are held by insiders. Comparatively, 0.8% of Lamb Weston shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Dividends
Constellation Brands pays an annual dividend of $0.93 per share and has a dividend yield of 0.4%. Lamb Weston pays an annual dividend of $0.94 per share and has a dividend yield of 1.1%. Constellation Brands pays out 10.2% of its earnings in the form of a dividend. Lamb Weston pays out 37.6% 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. Constellation Brands has raised its dividend for 1 consecutive years and Lamb Weston has raised its dividend for 1 consecutive years.
Volatility & Risk
Constellation Brands has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500. Comparatively, Lamb Weston has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500.
Valuation & Earnings
This table compares Constellation Brands and Lamb Weston's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Constellation Brands | $9.11 billion | 4.62 | $-11,800,000.00 | $9.12 | 23.79 |
Lamb Weston | $3.79 billion | 3.31 | $365.90 million | $2.50 | 34.32 |
Lamb Weston has lower revenue, but higher earnings than Constellation Brands. Constellation Brands is trading at a lower price-to-earnings ratio than Lamb Weston, indicating that it is currently the more affordable of the two stocks.
Summary
Constellation Brands beats Lamb Weston on 12 of the 17 factors compared between the two stocks.