Hershey (NYSE:HSY) and Cal-Maine Foods (NASDAQ:CALM) Critical Analysis

Cal-Maine Foods (NASDAQ:CALM) and Hershey (NYSE:HSY) are both consumer staples companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, profitability, risk, institutional ownership, analyst recommendations, earnings and dividends.

Valuation & Earnings

This table compares Cal-Maine Foods and Hershey”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cal-Maine Foods	$2.53 billion	1.22	$316.68 million	$1.17	56.44
Hershey	$12.26 billion	2.81	$883.26 million	$8.84	19.37

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

Profitability

This table compares Cal-Maine Foods and Hershey’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cal-Maine Foods	2.32%	2.21%	1.89%
Hershey	12.24%	31.92%	10.71%

Insider and Institutional Ownership

84.7% of Cal-Maine Foods shares are held by institutional investors. Comparatively, 58.0% of Hershey shares are held by institutional investors. 3.6% of Cal-Maine Foods shares are held by company insiders. Comparatively, 0.1% of Hershey shares are held by company 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.

Dividends

Cal-Maine Foods pays an annual dividend of $1.42 per share and has a dividend yield of 2.2%. Hershey pays an annual dividend of $5.80 per share and has a dividend yield of 3.4%. Cal-Maine Foods pays out 121.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hershey pays out 65.6% of its earnings in the form of a dividend. Cal-Maine Foods has increased its dividend for 1 consecutive years and Hershey has increased its dividend for 15 consecutive years. Hershey is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Cal-Maine Foods has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500. Comparatively, Hershey has a beta of 0.08, indicating that its stock price is 92% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Cal-Maine Foods and Hershey, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cal-Maine Foods	0	5	1	0	2.17
Hershey	1	17	7	0	2.24

Cal-Maine Foods presently has a consensus price target of $84.17, indicating a potential upside of 27.45%. Hershey has a consensus price target of $193.81, indicating a potential upside of 13.18%. Given Cal-Maine Foods’ higher probable upside, research analysts plainly believe Cal-Maine Foods is more favorable than Hershey.

Summary

Hershey beats Cal-Maine Foods on 12 of the 17 factors compared between the two stocks.

About Cal-Maine Foods

Cal-Maine Foods, Inc., together with its subsidiaries, produces, grades, packages, markets, and distributes shell eggs. The company offers specialty shell eggs, such as nutritionally enhanced, cage free, organic, free-range, pasture-raised, and brown eggs under the Egg-Land's Best, Land O' Lakes, Farmhouse Eggs, Sunups, Sunny Meadow, and 4Grain brand names. It sells its products to various customers, including national and regional grocery store chains, club stores, independent supermarkets, foodservice distributors, and egg product consumers primarily in the southwestern, southeastern, mid-western, and mid-Atlantic regions of the United States. Cal-Maine Foods, Inc. was founded in 1957 and is headquartered in Ridgeland, Mississippi.

About Hershey

The Hershey Company, together with its subsidiaries, engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally. The company operates through three segments: North America Confectionery, North America Salty Snacks, and International. It offers chocolate and non-chocolate confectionery products; gum and mint refreshment products, including mints, chewing gums, and bubble gums; protein bars; pantry items, such as baking ingredients, toppings, beverages, and sundae syrups; and snack items comprising spreads, bars, snack bites, mixes, popcorn, and pretzels. The company provides its products primarily under the Hershey’s, Reese’s, Kisses, Jolly Rancher, Almond Joy, Brookside, barkTHINS, Cadbury, Good & Plenty, Heath, Kit Kat, Payday, Rolo, Twizzlers, Whoppers, York, Ice Breakers, Breath Savers, Bubble Yum, Lily’s, SkinnyPop, Pirates Booty, Dot’s Homestyle Pretzels, and ONE Bar brands, as well as under the Pelon Pelo Rico, IO-IO, and Sofit brands. It markets and sells its products to wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, and department stores. The company exports its products in approximately 80 countries worldwide. The Hershey Company was founded in 1894 and is headquartered in Hershey, Pennsylvania.