Critical Comparison: J & J Snack Foods (NASDAQ:JJSF) vs. Lamb Weston (NYSE:LW)

J & J Snack Foods (NASDAQ:JJSF) and Lamb Weston (NYSE:LW) are both consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, profitability and earnings.

Insider and Institutional Ownership

76.0% of J & J Snack Foods shares are held by institutional investors. Comparatively, 89.6% of Lamb Weston shares are held by institutional investors. 20.4% of J & J Snack Foods shares are held by company insiders. Comparatively, 0.3% of Lamb Weston shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares J & J Snack Foods and Lamb Weston”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
J & J Snack Foods	$1.55 billion	0.91	$65.60 million	$2.98	25.31
Lamb Weston	$6.52 billion	0.89	$357.20 million	$2.14	19.69

Lamb Weston has higher revenue and earnings than J & J Snack Foods. Lamb Weston is trading at a lower price-to-earnings ratio than J & J Snack Foods, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares J & J Snack Foods and Lamb Weston’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
J & J Snack Foods	3.75%	9.01%	6.18%
Lamb Weston	4.61%	23.77%	5.76%

Dividends

J & J Snack Foods pays an annual dividend of $3.20 per share and has a dividend yield of 4.2%. Lamb Weston pays an annual dividend of $1.52 per share and has a dividend yield of 3.6%. J & J Snack Foods pays out 107.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lamb Weston pays out 71.0% of its earnings in the form of a dividend. J & J Snack Foods has increased its dividend for 20 consecutive years and Lamb Weston has increased its dividend for 7 consecutive years. J & J Snack Foods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

J & J Snack Foods has a beta of 0.38, indicating that its stock price is 62% less volatile than the S&P 500. Comparatively, Lamb Weston has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for J & J Snack Foods and Lamb Weston, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
J & J Snack Foods	2	0	1	0	1.67
Lamb Weston	1	10	3	0	2.14

J & J Snack Foods presently has a consensus price target of $120.00, suggesting a potential upside of 59.11%. Lamb Weston has a consensus price target of $47.82, suggesting a potential upside of 13.48%. Given J & J Snack Foods’ higher possible upside, equities research analysts clearly believe J & J Snack Foods is more favorable than Lamb Weston.

Summary

Lamb Weston beats J & J Snack Foods on 9 of the 17 factors compared between the two stocks.

About J & J Snack Foods

J&J Snack Foods Corp. engages in the manufacturing of nutritional snack foods and distribution of frozen beverages to the food service and retail supermarket industries. It operates through the following segments: Food Service, Retail Supermarkets, and Frozen Beverages. The Food Service segment includes soft pretzels, frozen novelties, churros, handheld products, and baked goods. The Retail Supermarkets segment offers soft pretzel products including Superpretzel, frozen juice treats and desserts, including Luigi’s real Italian ice, Minute Maid juice bars and soft frozen lemonade, Whole Fruit frozen fruit bars and sorbet, Philly Swirl cups and sticks, ICEE Squeeze-Up Tubes and dough enrobed handheld products including Patio burritos. The Frozen Beverages segment provides frozen beverages to the food service industry primarily under the names ICEE, SLUSH PUPPIE, and PARROT ICE in the United States, Mexico, and Canada, as well as repair and maintenance services. The company was founded by Gerald B. Shreiber in 1971 and is headquartered in Mount Laurel, NJ.

About Lamb Weston

Lamb Weston Holdings, Inc. produces, distributes, and markets frozen potato products worldwide. The company operates through four segments: Global, Foodservice, Retail, and Other. It offers frozen potatoes, commercial ingredients, and appetizers under the Lamb Weston brand, as well as under various customer labels. The company also provides its products under its owned or licensed brands, such as Grown in Idaho and Alexia, and other licensed brands, as well as under retailers' own brands. In addition, it engages in the vegetable and dairy businesses. The company sells its products through a network of internal sales personnel and independent brokers, agents, and distributors to chain restaurants, wholesale, grocery, mass merchants, club and specialty retailers, businesses, educational institutions, independent restaurants, regional chain restaurants, and convenience stores. Lamb Weston Holdings, Inc. was incorporated in 1950 and is headquartered in Eagle, Idaho.