Marzetti (NASDAQ:MZTI) vs. Smithfield Foods (NASDAQ:SFD) Head-To-Head Comparison

Smithfield Foods (NASDAQ:SFD) and Marzetti (NASDAQ:MZTI) are both mid-cap consumer staples companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, institutional ownership, dividends and earnings.

Institutional and Insider Ownership

66.4% of Marzetti shares are owned by institutional investors. 1.8% of Smithfield Foods shares are owned by company insiders. Comparatively, 29.1% of Marzetti shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Smithfield Foods and Marzetti”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Smithfield Foods	$15.53 billion	0.52	$987.00 million	$2.68	7.68
Marzetti	$1.93 billion	1.43	$191.61 million	$6.97	14.56

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

Profitability

This table compares Smithfield Foods and Marzetti’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Smithfield Foods	6.84%	15.55%	8.84%
Marzetti	9.93%	18.22%	13.43%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Smithfield Foods and Marzetti, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smithfield Foods	1	0	5	0	2.67
Marzetti	1	2	0	0	1.67

Smithfield Foods presently has a consensus target price of $31.00, indicating a potential upside of 50.56%. Marzetti has a consensus target price of $135.00, indicating a potential upside of 33.04%. Given Smithfield Foods’ stronger consensus rating and higher probable upside, analysts plainly believe Smithfield Foods is more favorable than Marzetti.

Volatility & Risk

Smithfield Foods has a beta of -0.51, indicating that its stock price is 151% less volatile than the S&P 500. Comparatively, Marzetti has a beta of 0.35, indicating that its stock price is 65% less volatile than the S&P 500.

Dividends

Smithfield Foods pays an annual dividend of $1.25 per share and has a dividend yield of 6.1%. Marzetti pays an annual dividend of $4.00 per share and has a dividend yield of 3.9%. Smithfield Foods pays out 46.6% of its earnings in the form of a dividend. Marzetti pays out 57.4% 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. Marzetti has increased its dividend for 62 consecutive years. Smithfield Foods is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Marzetti beats Smithfield Foods on 10 of the 17 factors compared between the two stocks.

About Smithfield Foods

Smithfield Foods, Inc. produces and markets a variety of fresh meat and packaged meats products both domestically and internationally. The Company operates in four segments: Pork, Hog Production, International and Corporate, each of which consists of a number of subsidiaries, joint ventures and other investments. The Pork segment consists mainly of its three wholly owned United States fresh pork and packaged meats subsidiaries: The Smithfield Packing Company, Inc. (Smithfield Packing), Farmland Foods, Inc. (Farmland Foods) and John Morrell Food Group (John Morrell). The Hog Production segment consists of the Company’s hog production operations located in the United States. On September 2012 (fiscal 2013), the Company acquired a 70% controlling interest in American Skin Food Group, LLC. Effective September 26, 2013, Shuanghui International Holdings Ltd merged with Smithfield Foods Inc, a producer and wholesaler of pork meat products.

About Marzetti

Lancaster Colony Corporation engages in the manufacturing and marketing of specialty food products for the retail and foodservice channels in the United States. It operates in two segments, Retail and Foodservice. The company offers frozen garlic bread under the New York BRAND Bakery; frozen Parkerhouse style yeast and dinner rolls under the Sister Schubert's brand; salad dressings under the Marzetti, Simply Dressed, Cardini's, and Girard's brands; vegetable and fruit dips under the Marzetti brand; croutons and salad toppings under the New York BRAND Bakery, Chatham Village, and Marzetti brands; and frozen pasta under the Marzetti Frozen Pasta brand. It also manufactures and sells other products to brand license agreements, including Olive Garden dressings, Buffalo Wild Wings sauces, and Chick-fil-A sauces. The company sells its products through sales personnel, food brokers, and distributors to retailers and restaurants. Lancaster Colony Corporation was incorporated in 1961 and is based in Westerville, Ohio.