Financial Analysis: Ingredion (INGR) and Kellogg (K)

Ingredion (NYSE: INGR) and Kellogg (NYSE:K) are both mid-cap consumer staples companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, profitability, risk, earnings and dividends.

Insider & Institutional Ownership

84.3% of Ingredion shares are owned by institutional investors. Comparatively, 85.4% of Kellogg shares are owned by institutional investors. 1.9% of Ingredion shares are owned by insiders. Comparatively, 1.3% of Kellogg shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Ingredion and Kellogg’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ingredion $5.80 billion 1.54 $1.05 billion $6.65 18.74
Kellogg $12.79 billion 1.86 $2.27 billion $2.21 31.12

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

Risk and Volatility

Ingredion has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, Kellogg has a beta of 0.49, indicating that its stock price is 51% less volatile than the S&P 500.

Dividends

Ingredion pays an annual dividend of $2.00 per share and has a dividend yield of 1.6%. Kellogg pays an annual dividend of $2.16 per share and has a dividend yield of 3.1%. Ingredion pays out 30.1% of its earnings in the form of a dividend. Kellogg pays out 97.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ingredion has raised its dividend for 4 consecutive years and Kellogg has raised its dividend for 12 consecutive years. Kellogg is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Ingredion and Kellogg’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ingredion 8.35% 20.84% 9.53%
Kellogg 6.12% 70.22% 9.15%

Analyst Ratings

This is a summary of current ratings and price targets for Ingredion and Kellogg, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ingredion 0 2 2 0 2.50
Kellogg 1 6 2 0 2.11

Ingredion currently has a consensus target price of $141.67, suggesting a potential upside of 13.70%. Kellogg has a consensus target price of $74.78, suggesting a potential upside of 8.74%. Given Ingredion’s stronger consensus rating and higher possible upside, equities analysts plainly believe Ingredion is more favorable than Kellogg.

About Ingredion

Ingredion Incorporated is an ingredients solutions provider. The Company manufactures and sells sweetener, starches, nutrition ingredients and biomaterial solutions derived from the wet milling and processing of corn and other starch-based materials to a range of industries, both domestically and internationally. It operates through four segments: North America, South America, Asia Pacific, and Europe, Middle East and Africa (EMEA). It turns corn, tapioca, potatoes, and other vegetables and fruits into ingredients and biomaterials for the food, beverage, paper and corrugating, brewing and other industries. Its product line includes animal feed products and edible corn oil. Its sweetener products include glucose syrups, high maltose syrup, high fructose corn syrup (HFCS), caramel color, dextrose, polyols, maltodextrins and glucose and syrup solids. Its starch-based products include both food-grade and industrial starches, and biomaterials. It also offers specialty ingredients.

About Kellogg

Kellogg Company is a manufacturer and marketer of ready-to-eat cereal and convenience foods. The Company’s principal products are ready-to-eat cereals and convenience foods, such as cookies, crackers, savory snacks, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles and veggie foods. Its segments include U.S. Morning Foods, which includes cereal, toaster pastries, health and wellness bars, and beverages; U.S. Snacks, which includes cookies, crackers, cereal bars, savory snacks and fruit-flavored snacks; U.S. Specialty, which represents food away from home channels, including food service, convenience, vending, Girl Scouts and food manufacturing; North America Other, which includes the U.S. Frozen, Kashi and Canada operating segments; Europe, which consists of European countries; Latin America, which consists of Central and South America and includes Mexico, and Asia Pacific, which consists of Sub-Saharan Africa, Australia and other Asian and Pacific markets.

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