MGP Ingredients (NASDAQ: MGPI) and Penford (NASDAQ:PENX) 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 analyst recommendations, dividends, valuation, risk, earnings, profitability and institutional ownership.

Institutional and Insider Ownership

99.9% of MGP Ingredients shares are held by institutional investors. 23.5% of MGP Ingredients shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

MGP Ingredients has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500. Comparatively, Penford has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500.

Valuation and Earnings

This table compares MGP Ingredients and Penford’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MGP Ingredients $328.08 million 4.16 $31.18 million $2.17 37.60
Penford N/A N/A N/A $0.72 26.36

MGP Ingredients has higher revenue and earnings than Penford. Penford 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 MGP Ingredients and Penford’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MGP Ingredients 10.56% 18.70% 12.39%
Penford 2.06% 8.92% 3.56%

Dividends

MGP Ingredients pays an annual dividend of $0.16 per share and has a dividend yield of 0.2%. Penford does not pay a dividend. MGP Ingredients pays out 7.4% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent ratings and recommmendations for MGP Ingredients and Penford, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MGP Ingredients 0 1 3 0 2.75
Penford 0 0 0 0 N/A

MGP Ingredients presently has a consensus target price of $80.00, suggesting a potential downside of 1.95%. Given MGP Ingredients’ higher probable upside, research analysts clearly believe MGP Ingredients is more favorable than Penford.

Summary

MGP Ingredients beats Penford on 12 of the 13 factors compared between the two stocks.

MGP Ingredients Company Profile

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.

Penford Company Profile

Penford Corporation (Penford) is a developer, manufacturer and marketer of natural-based ingredient systems for food and industrial applications, including fuel grade ethanol. The Company has research and development capabilities, which are used in understanding the complex chemistry of carbohydrate-based materials and in developing applications to address customer needs. Penford operates in two business segments: Industrial Ingredients and Food Ingredients. Industrial Ingredients segment is a supplier of chemically modified starches to the paper and packaging industries. Industrial Ingredients also produces food grade corn starch for sale by the Company’s Food Ingredients business. Food Ingredients segment is a developer and manufacturer of specialty starches and dextrins to the food manufacturing and food service industries. This business is engaged is in leveraging the inherent characteristics from potato, corn, tapioca and rice to help improve its customers’ product performance.

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