Critical Comparison: B&G Foods (NYSE:BGS) & McCormick & Company, Incorporated (NYSE:MKC)

B&G Foods (NYSE:BGS) and McCormick & Company, Incorporated (NYSE:MKC) are both consumer staples companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, risk, dividends, earnings, institutional ownership, analyst recommendations and valuation.

Risk & Volatility

B&G Foods has a beta of 0.44, suggesting that its stock price is 56% less volatile than the S&P 500. Comparatively, McCormick & Company, Incorporated has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for B&G Foods and McCormick & Company, Incorporated, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
B&G Foods	2	4	0	0	1.67
McCormick & Company, Incorporated	0	6	3	0	2.33

B&G Foods currently has a consensus target price of $6.10, suggesting a potential upside of 41.37%. McCormick & Company, Incorporated has a consensus target price of $80.29, suggesting a potential upside of 22.19%. Given B&G Foods’ higher possible upside, research analysts plainly believe B&G Foods is more favorable than McCormick & Company, Incorporated.

Dividends

B&G Foods pays an annual dividend of $0.76 per share and has a dividend yield of 17.6%. McCormick & Company, Incorporated pays an annual dividend of $1.80 per share and has a dividend yield of 2.7%. B&G Foods pays out -26.9% of its earnings in the form of a dividend. McCormick & Company, Incorporated pays out 62.5% 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. McCormick & Company, Incorporated has raised its dividend for 38 consecutive years. B&G Foods is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

66.2% of B&G Foods shares are owned by institutional investors. Comparatively, 79.7% of McCormick & Company, Incorporated shares are owned by institutional investors. 4.0% of B&G Foods shares are owned by company insiders. Comparatively, 23.8% of McCormick & Company, Incorporated shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares B&G Foods and McCormick & Company, Incorporated”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
B&G Foods	$1.93 billion	0.18	-$251.25 million	($2.83)	-1.52
McCormick & Company, Incorporated	$6.72 billion	2.62	$788.50 million	$2.88	22.81

McCormick & Company, Incorporated has higher revenue and earnings than B&G Foods. B&G Foods 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 B&G Foods and McCormick & Company, Incorporated’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
B&G Foods	-12.02%	7.16%	1.34%
McCormick & Company, Incorporated	11.50%	14.43%	6.02%

Summary

McCormick & Company, Incorporated beats B&G Foods on 14 of the 17 factors compared between the two stocks.

About B&G Foods

B&G Foods, Inc. is a holding company, which engages in the manufacture, sale, and distribution of shelf-stable frozen food, and household products in the U.S., Canada, and Puerto Rico. It operates through the following segments: Specialty, Meals, Frozen & Vegetables, and Spices & Flavor Solutions. The Specialty segment includes, among others, the Crisco, Clabber Girl, Bear Creek, Polaner, Underwood, B&G, Grandma’s, New York Style, Don Pepino, Sclafani, B&M, Baker’s Joy, Regina, TrueNorth, Static Guard, SugarTwin and Brer Rabbit brands. The Meals segment focuses on the Ortega, Maple Grove Farms, Cream of Wheat, Las Palmas, Victoria, Mama Mary’s, Spring Tree, McCann’s, Carey’s and Vermont Maid brands. The Frozen & Vegetables segment consists of Green Giant and Le Sueur brands. The Spices & Flavor Solutions segment offers Dash, Spice Islands, Weber, Ac’cent, Tone’s, Trappey’s, Durkee and Wright’s brands. Its products include frozen and canned vegetables, hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, and wine vinegar. Its brands include Back to Nature, Bear Creek, Cream of Wheat, Green Giant, Mrs. Dash, and Ortega. The company was founded in 1889 and is headquartered in Parsippany, NJ.

About McCormick & Company, Incorporated

McCormick & Co., Inc. engages in the manufacturing, marketing, and distribution of spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. It operates through the Consumer and Flavor Solutions segments. The Consumer segment sells spices, seasonings, condiments, and sauces. The Flavor Solutions segment includes seasoning blends, spices and herbs, condiments, coating systems, and compound flavors. The company was founded by Willoughby M. McCormick in 1889 and is headquartered in Baltimore, MD.