Darling Ingredients (NYSE:DAR) and Lamb Weston (NYSE:LW) Critical Analysis

Lamb Weston (NYSE:LW) and Darling Ingredients (NYSE:DAR) are both consumer staples companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, profitability, dividends, earnings and analyst recommendations.

Insider & Institutional Ownership

89.6% of Lamb Weston shares are held by institutional investors. Comparatively, 94.4% of Darling Ingredients shares are held by institutional investors. 0.3% of Lamb Weston shares are held by insiders. Comparatively, 1.9% of Darling Ingredients shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for Lamb Weston and Darling Ingredients, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lamb Weston	1	9	3	0	2.15
Darling Ingredients	1	0	10	2	3.00

Lamb Weston currently has a consensus price target of $48.00, suggesting a potential upside of 10.96%. Darling Ingredients has a consensus price target of $68.00, suggesting a potential upside of 7.62%. Given Lamb Weston’s higher possible upside, equities analysts plainly believe Lamb Weston is more favorable than Darling Ingredients.

Risk & Volatility

Lamb Weston has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500. Comparatively, Darling Ingredients has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500.

Earnings & Valuation

This table compares Lamb Weston and Darling Ingredients”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lamb Weston	$6.45 billion	0.93	$357.20 million	$2.14	20.21
Darling Ingredients	$6.14 billion	1.63	$62.80 million	$1.38	45.78

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

Profitability

This table compares Lamb Weston and Darling Ingredients’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lamb Weston	4.61%	23.77%	5.76%
Darling Ingredients	3.54%	5.76%	2.96%

Summary

Darling Ingredients beats Lamb Weston on 8 of the 15 factors compared between the two stocks.

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.

About Darling Ingredients

Darling Ingredients Inc. develops, produces, and sells natural ingredients from edible and inedible bio-nutrients in North America, Europe, China, South America, and internationally. The company operates through three segments: Feed Ingredients, Food Ingredients, and Fuel Ingredients. It offers ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy, and fertilizer industries. The company also collects and transforms various animal by-product streams into useable and specialty ingredients, such as collagen, edible fats, feed-grade fats, animal proteins and meals, plasma, pet food ingredients, organic fertilizers, yellow grease, fuel feedstock, green energy, natural casings, and hides. In addition, it recovers and converts used cooking oil and animal fats, and residual bakery products into valuable feed and fuel ingredients. Further, the company provides environmental services, including grease trap collection and disposal services to food service establishments. It primarily operates under the Rendac, Sonac, FASA, Ecoson, Rousselot, Gelnex, and CTH brand names. The company was formerly known as Darling International Inc. and changed its name to Darling Ingredients Inc. in May 2014. Darling Ingredients Inc. was founded in 1882 and is headquartered in Irving, Texas.