McCormick & Company (NYSE: MKC) and Farmer Bros (NASDAQ:FARM) are both consumer staples companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, risk, profitability, analyst recommendations, valuation, earnings and dividends.
This is a summary of current ratings and target prices for McCormick & Company and Farmer Bros, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|McCormick & Company||1||5||3||0||2.22|
McCormick & Company pays an annual dividend of $2.08 per share and has a dividend yield of 2.0%. Farmer Bros does not pay a dividend. McCormick & Company pays out 48.8% of its earnings in the form of a dividend. McCormick & Company has raised its dividend for 31 consecutive years.
Earnings and Valuation
This table compares McCormick & Company and Farmer Bros’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|McCormick & Company||$4.83 billion||2.81||$477.40 million||$4.26||24.28|
|Farmer Bros||$541.50 million||0.89||$24.40 million||$0.70||40.79|
McCormick & Company has higher revenue and earnings than Farmer Bros. McCormick & Company is trading at a lower price-to-earnings ratio than Farmer Bros, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
McCormick & Company has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500. Comparatively, Farmer Bros has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500.
This table compares McCormick & Company and Farmer Bros’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|McCormick & Company||16.04%||23.39%||6.49%|
Insider and Institutional Ownership
78.7% of McCormick & Company shares are held by institutional investors. Comparatively, 57.8% of Farmer Bros shares are held by institutional investors. 19.2% of McCormick & Company shares are held by insiders. Comparatively, 9.3% of Farmer Bros shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
McCormick & Company beats Farmer Bros on 12 of the 16 factors compared between the two stocks.
About McCormick & Company
McCormick & Company, Incorporated manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. The company operates through two segments, Consumer and Industrial. The Consumer segment offers spices, herbs, and seasonings, as well as desserts. This segment markets its products under the McCormick, French, Frank's RedHot, Lawry's, Club House, Gourmet Garden, OLD BAY brands in the Americas; Ducros, Schwartz, Kamis, and Drogheria & Alimentari, and Vahiné brand names in Europe, the Middle East, and Africa; McCormick and DaQiao brands in China; and McCormick, Aeroplane, and Gourmet Garden brand names in Australia, as well as markets regional and ethnic brands, such as Zatarain's, Stubb's, Thai Kitchen, and Simply Asia. It also supplies its products under the private labels. This segment serves retailers comprising grocery, mass merchandise, warehouse clubs, discount and drug stores, and e-commerce retailers directly and indirectly through distributors or wholesalers. The Industrial segment offers seasoning blends, spices and herbs, condiments, coating systems, and compound flavors to multinational food manufacturers and foodservice customers. It serves foodservice customers directly and indirectly through distributors. McCormick & Company, Incorporated was founded in 1889 and is based in Sparks, Maryland.
About Farmer Bros
Farmer Bros. Co. engages in the manufacture, wholesale, and distribution of coffee, tea, and culinary products in the United States. The company offers roast and ground coffee; frozen liquid coffee; flavored and unflavored iced and hot teas; culinary products, including gelatins and puddings, soup bases, dressings, gravy and sauce mixes, pancake and biscuit mixes, jellies and preserves, and coffee-related products, such as coffee filters, sugar, and creamers; spices; and other beverages comprising cappuccino, cocoa, granitas, and ready-to-drink iced coffee. It sells its products under the Farmer Brothers, Artisan Collection by Farmer Brothers, Superior, Metropolitan, China Mist, Direct Trade, Fair Trade Certified, Rainforest Alliance Certified, Un Momento, Collaborative Coffee, Cain's, and McGarvey brand names, as well as under various private labels. The company serves small independent restaurants, foodservice operators, restaurant and convenience store chains, hotels, casinos, healthcare facilities, gourmet coffee houses, and grocery chains. It distributes its products through direct-store-delivery network, and common carriers or third-party distributors, as well as Website. Farmer Bros. Co. was founded in 1912 and is headquartered in Northlake, Texas.
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