Financial Analysis: Andersons (NASDAQ:ANDE) versus Sysco (NYSE:SYY)

Sysco (NYSE:SYY) and Andersons (NASDAQ:ANDE) are both consumer staples companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitability, risk, analyst recommendations, dividends, earnings and institutional ownership.

Dividends

Sysco pays an annual dividend of $2.20 per share and has a dividend yield of 2.8%. Andersons pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Sysco pays out 60.1% of its earnings in the form of a dividend. Andersons pays out 15.4% 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. Sysco has raised its dividend for 57 consecutive years and Andersons has raised its dividend for 28 consecutive years. Sysco is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Sysco and Andersons”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sysco	$84.55 billion	0.45	$1.76 billion	$3.66	21.51
Andersons	$11.01 billion	0.21	$95.71 million	$5.18	12.91

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

Volatility and Risk

Sysco has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, Andersons has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Sysco and Andersons, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sysco	1	6	9	0	2.50
Andersons	0	1	3	1	3.00

Sysco presently has a consensus target price of $89.50, indicating a potential upside of 13.69%. Andersons has a consensus target price of $95.00, indicating a potential upside of 42.01%. Given Andersons’ stronger consensus rating and higher possible upside, analysts clearly believe Andersons is more favorable than Sysco.

Profitability

This table compares Sysco and Andersons’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sysco	2.08%	95.05%	8.00%
Andersons	1.62%	16.23%	5.84%

Institutional and Insider Ownership

83.4% of Sysco shares are held by institutional investors. Comparatively, 87.1% of Andersons shares are held by institutional investors. 0.6% of Sysco shares are held by company insiders. Comparatively, 4.3% of Andersons shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Sysco beats Andersons on 10 of the 17 factors compared between the two stocks.

About Sysco

Sysco Corporation, through its subsidiaries, engages in the marketing and distribution of various food and related products to the foodservice or food-away-from-home industry in the United States, Canada, the United Kingdom, France, and internationally. It operates through U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Other segments. The company distributes frozen food, such as meat, seafood, fully prepared entrées, fruits, vegetables, and desserts; canned and dry food products; fresh meat and seafood products; dairy products; beverages; imported specialties; and fresh produce products. It also supplies various non-food items, including paper products comprising disposable napkins, plates, and cups; tableware consisting of glassware and silverware; cookware, such as pots, pans, and utensils; restaurant and kitchen equipment and supplies; and cleaning supplies. The company serves restaurants, hospitals and nursing facilities, schools and colleges, hotels and motels, industrial caterers, and other foodservice venues. Sysco Corporation was incorporated in 1969 and is headquartered in Houston, Texas.

About Andersons

The Andersons, Inc. operates in trade, renewables, and nutrient and industrial sectors in the United States, Canada, Mexico, Egypt, Switzerland, and internationally. It operates through three segments: Trade, Renewables, and Nutrient & Industrial. The company’s Trade segment operates grain elevators; stores commodities; and provides grain marketing, risk management, and origination services, as well as sells commodities, such as corn, soybeans, wheat, oats, ethanol, and corn oil. This segment also engages in the commodity merchandising business, as well as offers logistics for physical commodities, such as whole grains, grain products, feed ingredients, domestic fuel products, and other agricultural commodities. Its Renewables segment produces, purchases, and sells ethanol, and co-products, as well as offers facility operations, risk management, and marketing services to the ethanol plants it invests in and operates. The company’s Nutrient & Industrial segment manufactures, distributes, and retails agricultural and related plant nutrients, liquid industrial products, corncob-based products, and pelleted lime and gypsum products, as well as turf fertilizer, pesticide, and herbicide products; and crop nutrients, crop protection chemicals, and seed products, as well as provides application and agronomic services to commercial and family farmers. In addition, this segment produces corncob-based products for laboratory animal bedding and private-label cat litter, as well as absorbents, blast cleaners, carriers, and polishers; professional lawn care products for golf course and turf care markets; fertilizer and weed, and pest control products; dry and liquid agricultural nutrients, pelleted lime, gypsum, and soil amendments; and micronutrients, as well as industrial products comprising nitrogen reagents, calcium nitrate, deicers, and dust abatement products. The Andersons, Inc. was founded in 1947 and is based in Maumee, Ohio.