McCormick & Company, Incorporated (MKC) vs. Kraft Heinz (KHC) Head to Head Analysis

McCormick & Company, Incorporated (NYSE: MKC) and Kraft Heinz (NASDAQ:KHC) are both large-cap consumer staples companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, analyst recommendations, institutional ownership and risk.

Valuation and Earnings

This table compares McCormick & Company, Incorporated and Kraft Heinz’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
McCormick & Company, Incorporated $4.41 billion 3.06 $472.30 million $3.62 28.48
Kraft Heinz $26.49 billion 3.58 $3.63 billion $3.21 24.25

Kraft Heinz has higher revenue and earnings than McCormick & Company, Incorporated. Kraft Heinz is trading at a lower price-to-earnings ratio than McCormick & Company, Incorporated, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares McCormick & Company, Incorporated and Kraft Heinz’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
McCormick & Company, Incorporated 10.05% 26.09% 8.17%
Kraft Heinz 15.03% 7.49% 3.63%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for McCormick & Company, Incorporated and Kraft Heinz, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
McCormick & Company, Incorporated 0 6 3 0 2.33
Kraft Heinz 0 4 10 0 2.71

McCormick & Company, Incorporated currently has a consensus target price of $105.75, suggesting a potential upside of 2.56%. Kraft Heinz has a consensus target price of $92.54, suggesting a potential upside of 18.88%. Given Kraft Heinz’s stronger consensus rating and higher possible upside, analysts plainly believe Kraft Heinz is more favorable than McCormick & Company, Incorporated.

Institutional and Insider Ownership

76.1% of McCormick & Company, Incorporated shares are owned by institutional investors. Comparatively, 62.0% of Kraft Heinz shares are owned by institutional investors. 15.3% of McCormick & Company, Incorporated shares are owned by company insiders. Comparatively, 26.9% of Kraft Heinz shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

McCormick & Company, Incorporated pays an annual dividend of $2.08 per share and has a dividend yield of 2.0%. Kraft Heinz pays an annual dividend of $2.50 per share and has a dividend yield of 3.2%. McCormick & Company, Incorporated pays out 57.5% of its earnings in the form of a dividend. Kraft Heinz pays out 77.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kraft Heinz has increased its dividend for 30 consecutive years. Kraft Heinz is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

McCormick & Company, Incorporated has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500. Comparatively, Kraft Heinz has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500.

Summary

Kraft Heinz beats McCormick & Company, Incorporated on 10 of the 17 factors compared between the two stocks.

McCormick & Company, Incorporated Company Profile

McCormick & Company, Incorporated is engaged in manufacturing, marketing and distributing spices, seasoning mixes, condiments and other flavorful products to the food industry, including retailers, food manufacturers and foodservice businesses. The Company’s segments include consumer and industrial. The Company is involved in the manufacturing and sales of flavorful products. As of November 30, 2016, it offered brands for consumers in approximately 150 countries and territories. The Company’s brands in the Americas include McCormick, Lawry’s, and Club House, as well as brands, such as Gourmet Garden and OLD BAY. It provides a range of products to food manufacturers and foodservice customers. The Company’s sales, distribution and production facilities are located in North America, Europe and China. It markets regional and ethnic brands, such as Zatarain’s, Stubb’s, Thai Kitchen and Simply Asia. The Company offers sensory testing, culinary research, food safety and flavor application.

Kraft Heinz Company Profile

The Kraft Heinz Company is a food and beverage company. The Company is engaged in the manufacturing and marketing of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. The Company’s segments include the United States, Canada and Europe. The Company’s remaining businesses are combined as Rest of World. The Rest of World consists of Latin America and Asia, Middle East and Africa (AMEA). The Company provides products for various occasions whether at home, in restaurants or on the go. The Company’s brands include Heinz, Kraft, Oscar Mayer, Philadelphia, Planters, Velveeta, Lunchables, Maxwell House, Capri Sun, and Ore-Ida. The Company’s products are sold through its own sales organizations and through independent brokers, agents and distributors to chain, wholesale, cooperative and independent grocery accounts, convenience stores, drug stores, value stores, bakeries and pharmacies.

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