General Mills (NYSE: GIS) and Archer Daniels Midland (NYSE:ADM) are both large-cap non-cyclical consumer goods & services companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, dividends, risk, earnings and valuation.
Risk & Volatility
General Mills has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500. Comparatively, Archer Daniels Midland has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500.
General Mills pays an annual dividend of $1.96 per share and has a dividend yield of 3.4%. Archer Daniels Midland pays an annual dividend of $1.28 per share and has a dividend yield of 3.1%. General Mills pays out 70.3% of its earnings in the form of a dividend. Archer Daniels Midland pays out 59.8% 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. General Mills has increased its dividend for 13 consecutive years and Archer Daniels Midland has increased its dividend for 41 consecutive years.
This table compares General Mills and Archer Daniels Midland’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Archer Daniels Midland||2.01%||7.86%||3.49%|
Earnings and Valuation
This table compares General Mills and Archer Daniels Midland’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|General Mills||$15.62 billion||2.11||$1.66 billion||$2.79||20.74|
|Archer Daniels Midland||$62.35 billion||0.37||$1.28 billion||$2.14||19.25|
General Mills has higher earnings, but lower revenue than Archer Daniels Midland. Archer Daniels Midland is trading at a lower price-to-earnings ratio than General Mills, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
72.8% of General Mills shares are owned by institutional investors. Comparatively, 75.9% of Archer Daniels Midland shares are owned by institutional investors. 1.4% of General Mills shares are owned by insiders. Comparatively, 2.7% of Archer Daniels Midland shares are owned by 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.
This is a summary of recent recommendations and price targets for General Mills and Archer Daniels Midland, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Archer Daniels Midland||1||6||1||0||2.00|
General Mills presently has a consensus target price of $56.27, suggesting a potential downside of 2.75%. Archer Daniels Midland has a consensus target price of $41.57, suggesting a potential upside of 0.90%. Given Archer Daniels Midland’s stronger consensus rating and higher possible upside, analysts clearly believe Archer Daniels Midland is more favorable than General Mills.
About General Mills
General Mills, Inc. is a manufacturer and marketer of branded consumer foods sold through retail stores. The Company is a supplier of branded and unbranded food products to the North American foodservice and commercial baking industries. The Company has three segments: U.S. Retail, International, and Convenience Stores and Foodservice. Its products are marketed under various brands, which include Annie’s and Betty Crocker. The Company’s U.S. Retail segment reflects business with a range of grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains, and e-commerce grocery providers operating throughout the United States. The International segment consists of retail and foodservice businesses outside of the United States. The Convenience Stores and Foodservice segment’s product categories include ready-to-eat cereals, snacks, refrigerated yogurt, frozen meals, unbaked and fully baked frozen dough products, and baking mixes.
About Archer Daniels Midland
Archer-Daniels-Midland Company is a processor of oilseeds, corn, wheat, cocoa and other agricultural commodities. The Company manufactures protein meal, vegetable oil, corn sweeteners, flour, biodiesel, ethanol, and other food and feed ingredients. Its segments include Agricultural Services, which utilizes its United States grain elevator, global transportation network and port operations to buy, store, clean and transport agricultural commodities, such as oilseeds, wheat, milo, oats, rice and barley, and resells these commodities primarily as food and feed ingredients and as raw materials for the agricultural processing industry; Corn Processing, which is engaged in corn wet milling and dry milling activities; Oilseeds Processing, which includes global activities related to the origination, merchandising, crushing and further processing of oilseeds; Wild Flavors and Specialty Ingredients products, which include flavors, sweeteners and health ingredients; Other, and Corporate.
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