Critical Review: Marzetti (NASDAQ:MZTI) vs. General Mills (NYSE:GIS)

Marzetti (NASDAQ:MZTI) and General Mills (NYSE:GIS) are both consumer staples companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, valuation, dividends, profitability, earnings and institutional ownership.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Marzetti and General Mills, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Marzetti	1	2	1	0	2.00
General Mills	6	11	4	0	1.90

Marzetti currently has a consensus target price of $169.33, indicating a potential upside of 47.25%. General Mills has a consensus target price of $42.44, indicating a potential upside of 25.92%. Given Marzetti’s stronger consensus rating and higher possible upside, equities analysts clearly believe Marzetti is more favorable than General Mills.

Dividends

Marzetti pays an annual dividend of $4.00 per share and has a dividend yield of 3.5%. General Mills pays an annual dividend of $2.44 per share and has a dividend yield of 7.2%. Marzetti pays out 62.6% of its earnings in the form of a dividend. General Mills pays out 59.7% 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. Marzetti has raised its dividend for 62 consecutive years and General Mills has raised its dividend for 5 consecutive years. General Mills is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Marzetti and General Mills”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Marzetti	$1.91 billion	1.65	$167.35 million	$6.39	18.00
General Mills	$19.49 billion	0.92	$2.30 billion	$4.09	8.24

General Mills has higher revenue and earnings than Marzetti. General Mills is trading at a lower price-to-earnings ratio than Marzetti, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Marzetti and General Mills’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Marzetti	9.06%	18.12%	14.01%
General Mills	12.05%	19.19%	5.48%

Risk & Volatility

Marzetti has a beta of 0.38, meaning that its stock price is 62% less volatile than the S&P 500. Comparatively, General Mills has a beta of -0.02, meaning that its stock price is 102% less volatile than the S&P 500.

Insider & Institutional Ownership

66.4% of Marzetti shares are held by institutional investors. Comparatively, 75.7% of General Mills shares are held by institutional investors. 29.1% of Marzetti shares are held by company insiders. Comparatively, 0.3% of General Mills shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Marzetti beats General Mills on 9 of the 17 factors compared between the two stocks.

About Marzetti

Lancaster Colony Corporation engages in the manufacturing and marketing of specialty food products for the retail and foodservice channels in the United States. It operates in two segments, Retail and Foodservice. The company offers frozen garlic bread under the New York BRAND Bakery; frozen Parkerhouse style yeast and dinner rolls under the Sister Schubert's brand; salad dressings under the Marzetti, Simply Dressed, Cardini's, and Girard's brands; vegetable and fruit dips under the Marzetti brand; croutons and salad toppings under the New York BRAND Bakery, Chatham Village, and Marzetti brands; and frozen pasta under the Marzetti Frozen Pasta brand. It also manufactures and sells other products to brand license agreements, including Olive Garden dressings, Buffalo Wild Wings sauces, and Chick-fil-A sauces. The company sells its products through sales personnel, food brokers, and distributors to retailers and restaurants. Lancaster Colony Corporation was incorporated in 1961 and is based in Westerville, Ohio.

About General Mills

General Mills, Inc. manufactures and markets branded consumer foods worldwide. The company operates through four segments: North America Retail; International; Pet; and North America Foodservice. It offers grain, ready-to-eat cereals, refrigerated yogurt, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes, bakery flour, frozen pizza and pizza snacks, snack bars, fruit and savory snacks, ice cream and frozen desserts, unbaked and fully baked frozen dough products, frozen hot snacks, ethnic meals, side dish mixes, frozen breakfast and entrees, nutrition bars, and frozen and shelf-stable vegetables. The company also manufactures and markets pet food products, including dog and cat food; and operates ice cream parlors. It markets its products under the Annie’s, Betty Crocker, Bisquick, Blue Buffalo, Bugles, Cascadian Farm, Cheerios, Chex, Cinnamon Toast Crunch, Cocoa Puffs, Cookie Crisp, Dunkaroos, Edgard & Cooper, Fiber One, Fruit by the Foot, Fruit Gushers, Fruit Roll-Ups, Gardetto’s, Gold Medal, Golden Grahams, Häagen-Dazs, Kitano, Kix, Lärabar, Latina, Lucky Charms, Muir Glen, Nature Valley, Nudges, Oatmeal Crisp, Old El Paso, Pillsbury, Progresso, Tastefuls, Total, Totino’s , Trix, True Chews, True Solutions, Wanchai Ferry, Wheaties, Wilderness, and Yoki brands. The company sells its products to grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains, e-commerce retailers, commercial and noncommercial foodservice distributors and operators, restaurants, convenience stores, and pet specialty stores. General Mills, Inc. was founded in 1866 and is headquartered in Minneapolis, Minnesota.