Penford (NASDAQ: PENX) and Hershey (NYSE:HSY) are both non-cyclical consumer goods & services companies, but which is the better business? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, profitability, valuation, earnings and analyst recommendations.
This table compares Penford and Hershey’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
51.2% of Hershey shares are owned by institutional investors. 0.9% of Hershey 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.
This is a summary of recent ratings for Penford and Hershey, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Hershey has a consensus target price of $114.58, indicating a potential upside of 3.95%. Given Hershey’s higher possible upside, analysts plainly believe Hershey is more favorable than Penford.
Earnings & Valuation
This table compares Penford and Hershey’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Hershey||$7.44 billion||3.12||$720.04 million||$3.36||32.81|
Hershey has higher revenue and earnings than Penford. Penford is trading at a lower price-to-earnings ratio than Hershey, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Penford has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500. Comparatively, Hershey has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500.
Hershey pays an annual dividend of $2.62 per share and has a dividend yield of 2.4%. Penford does not pay a dividend. Hershey pays out 78.0% 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 has increased its dividend for 8 consecutive years.
Hershey beats Penford on 12 of the 14 factors compared between the two stocks.
Penford Corporation (Penford) is a developer, manufacturer and marketer of natural-based ingredient systems for food and industrial applications, including fuel grade ethanol. The Company has research and development capabilities, which are used in understanding the complex chemistry of carbohydrate-based materials and in developing applications to address customer needs. Penford operates in two business segments: Industrial Ingredients and Food Ingredients. Industrial Ingredients segment is a supplier of chemically modified starches to the paper and packaging industries. Industrial Ingredients also produces food grade corn starch for sale by the Company’s Food Ingredients business. Food Ingredients segment is a developer and manufacturer of specialty starches and dextrins to the food manufacturing and food service industries. This business is engaged is in leveraging the inherent characteristics from potato, corn, tapioca and rice to help improve its customers’ product performance.
The Hershey Company is a producer of chocolate in North America. The Company’s principal product offerings include chocolate and non-chocolate confectionery products; gum and mint refreshment products; pantry items, such as baking ingredients and beverages, and snack items, such as spreads, meat snacks, bars and snack bites and mixes. Its segments include North America, and International and Other. The North America segment includes its chocolate and non-chocolate confectionery business, as well as its grocery and snacks business. This includes developing and growing its business in chocolate and non-chocolate confectionery, pantry, food service and other snacking product lines. The Company distributes and sells confectionery products in export markets of Asia, Latin America, the Middle East, Europe, Africa and other regions. As of December 31, 2016, the Company marketed, sold and distributed its products under more than 80 brand names in approximately 70 countries across the world.
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