Dean Foods (NYSE: DF) and MGP Ingredients (NASDAQ:MGPI) are both small-cap consumer staples companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, profitability, analyst recommendations, dividends and risk.

Insider and Institutional Ownership

94.1% of Dean Foods shares are owned by institutional investors. 1.2% of Dean Foods shares are owned by company insiders. Comparatively, 23.5% of MGP Ingredients shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Dean Foods and MGP Ingredients, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dean Foods 2 5 4 0 2.18
MGP Ingredients 0 2 2 0 2.50

Dean Foods presently has a consensus target price of $13.06, suggesting a potential upside of 15.84%. MGP Ingredients has a consensus target price of $68.33, suggesting a potential downside of 13.37%. Given Dean Foods’ higher probable upside, equities analysts clearly believe Dean Foods is more favorable than MGP Ingredients.

Risk and Volatility

Dean Foods has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500. Comparatively, MGP Ingredients has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500.

Dividends

Dean Foods pays an annual dividend of $0.36 per share and has a dividend yield of 3.2%. MGP Ingredients pays an annual dividend of $0.16 per share and has a dividend yield of 0.2%. Dean Foods pays out 78.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MGP Ingredients pays out 7.4% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Dean Foods and MGP Ingredients’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dean Foods $7.71 billion 0.13 $119.92 million $0.46 24.50
MGP Ingredients $328.08 million 4.02 $31.18 million $2.17 36.35

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

Profitability

This table compares Dean Foods and MGP Ingredients’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dean Foods 0.53% 14.04% 3.35%
MGP Ingredients 10.56% 18.70% 12.39%

Summary

MGP Ingredients beats Dean Foods on 10 of the 16 factors compared between the two stocks.

About Dean Foods

Dean Foods Company is a food and beverage company. The Company processes and distributes fluid milk, and other dairy and dairy case products in the United States. It is engaged in manufacturing, marketing, selling and distributing a range of branded and private label dairy and dairy case products. It offers branded and private label dairy case products, including fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy products to retailers, distributors, foodservice outlets, educational institutions and governmental entities across the United States. It also offers juices, teas and bottled water. As of December 31, 2016, the Company had over 50 national, regional and local dairy brands, as well as private labels. As of December 31, 2016, the Company’s national, local and regional licensed brands included Alta Dena, Hygeia, PET, Arctic Splash, Jilbert, Pog, Barbers Dairy, Purity, Berkeley Farms, Land-O-Sun & design and ReadyLeaf, Broughton.

About MGP Ingredients

MGP Ingredients, Inc. is a producer and supplier of distilled spirits, and specialty wheat protein and starch food ingredients. The Company’s distilled spirits include bourbon and rye whiskeys, and grain neutral spirits, including vodka and gin. The Company’s segments include distillery products and ingredient solutions. The distillery products segment consists of food grade alcohol and distillery co-products, such as distillers feed and fuel grade alcohol. The ingredient solutions segment consists of specialty starches and proteins, commodity starches and commodity proteins. The distillery products segment also includes warehouse services, including barrel put away, barrel storage, and barrel retrieval services. It is also a producer of industrial alcohol for use in both food and non-food applications. The Company’s distillery products are derived from corn and other grains (including rye, barley, wheat, barley malt and milo), and its ingredient products are derived from wheat flour.

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