Critical Comparison: Mondelez International (MDLZ) & Conagra Brands (CAG)

Mondelez International (NASDAQ: MDLZ) and Conagra Brands (NYSE:CAG) are both large-cap non-cyclical consumer goods & services companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, earnings, institutional ownership, analyst recommendations, valuation and profitability.

Dividends

Mondelez International pays an annual dividend of $0.88 per share and has a dividend yield of 2.0%. Conagra Brands pays an annual dividend of $0.85 per share and has a dividend yield of 2.3%. Mondelez International pays out 61.1% of its earnings in the form of a dividend. Conagra Brands pays out 50.6% 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. Conagra Brands is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Mondelez International and Conagra Brands’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mondelez International $25.92 billion 2.49 $1.66 billion $1.44 30.02
Conagra Brands $7.83 billion 1.92 $639.30 million $1.68 22.33

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

Insider and Institutional Ownership

75.8% of Mondelez International shares are owned by institutional investors. Comparatively, 78.9% of Conagra Brands shares are owned by institutional investors. 3.6% of Mondelez International shares are owned by insiders. Comparatively, 0.8% of Conagra Brands shares are owned by 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.

Profitability

This table compares Mondelez International and Conagra Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mondelez International 8.61% 12.31% 5.07%
Conagra Brands 9.04% 19.58% 7.62%

Volatility & Risk

Mondelez International has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, Conagra Brands has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for Mondelez International and Conagra Brands, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mondelez International 0 2 9 1 2.92
Conagra Brands 0 2 8 0 2.80

Mondelez International presently has a consensus target price of $49.58, indicating a potential upside of 14.70%. Conagra Brands has a consensus target price of $41.56, indicating a potential upside of 10.76%. Given Mondelez International’s stronger consensus rating and higher probable upside, research analysts plainly believe Mondelez International is more favorable than Conagra Brands.

Summary

Mondelez International beats Conagra Brands on 10 of the 17 factors compared between the two stocks.

About Mondelez International

Mondelez International, Inc. is a snack company. The Company manufactures and markets snack food and beverage products for consumers. It operates through four segments: Latin America, Asia, Middle East, and Africa (AMEA), Europe and North America. As of December 31, 2016, its brands spanned five product categories: Biscuits (including cookies, crackers and salted snacks); Chocolate; Gum and candy; Beverages (including coffee and powdered beverages), and Cheese and grocery. Itsportfolio includes various snack brands, including Nabisco, Oreo, LU and belVita biscuits; Cadbury, Milka, Cadbury Dairy Milk and Toblerone chocolate; Trident gum; Halls candy, and Tang powdered beverages. The Company sells its products to supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores and retail food outlets. As of December 31, 2016, it sold its products to consumers in approximately 165 countries.

About Conagra Brands

Conagra Brands, Inc., formerly ConAgra Foods, Inc., operates as a packaged food company. The Company operates through two segments: Consumer Foods and Commercial Foods. The Company sells branded and customized food products, as well as commercially branded foods. It also supplies vegetable, spice and grain products to a range of restaurants, foodservice operators and commercial customers. Conagra Foodservice offers products to restaurants, retailers, commercial customers and other foodservice suppliers. The Company also operates in the countries outside the United States, such as Canada and Mexico. The Company’s brands include Marie Callender’s, Healthy Choice, Slim Jim, Hebrew National, Orville Redenbacher’s, Peter Pan, Reddi-wip, PAM, Snack Pack, Banquet, Chef Boyardee, Egg Beaters, Rosarita, Fleischmann’s and Hunt’s. The Company sells its products in grocery, convenience, mass merchandise and club stores.

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