Critical Comparison: Hostess Brands (TWNK) & BAB (BABB)
Hostess Brands (NASDAQ:TWNK) and BAB (OTCMKTS:BABB) are both small-cap consumer staples companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, earnings, institutional ownership, analyst recommendations, valuation and profitability.
This table compares Hostess Brands and BAB’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current ratings and price targets for Hostess Brands and BAB, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Hostess Brands presently has a consensus target price of $14.88, indicating a potential upside of 32.69%. Given Hostess Brands’ higher probable upside, research analysts plainly believe Hostess Brands is more favorable than BAB.
BAB pays an annual dividend of $0.04 per share and has a dividend yield of 5.8%. Hostess Brands does not pay a dividend.
Volatility & Risk
Hostess Brands has a beta of 0.28, indicating that its stock price is 72% less volatile than the S&P 500. Comparatively, BAB has a beta of -0.12, indicating that its stock price is 112% less volatile than the S&P 500.
Insider and Institutional Ownership
85.4% of Hostess Brands shares are owned by institutional investors. 24.6% of Hostess Brands shares are owned by insiders. Comparatively, 34.1% of BAB shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares Hostess Brands and BAB’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Hostess Brands||$776.19 million||1.88||$223.89 million||$0.63||17.79|
Hostess Brands has higher revenue and earnings than BAB.
Hostess Brands beats BAB on 8 of the 13 factors compared between the two stocks.
About Hostess Brands
Hostess Brands, Inc., a packaged food company, develops, manufactures, markets, sells, and distributes fresh sweet baked goods in the United States. It primarily offer coffee cakes, cinnamon rolls, honey buns, brownies, bread and buns, jumbo muffins, and eclairs under the Twinkies, CupCakes, Ding Dongs, Zingers, HoHos, Donettes, Dolly Madison, and Superior on Main brands. The company was formerly known as Gores Holdings, Inc. and changed its name to Hostess Brands, Inc. in November 2016. Hostess Brands, Inc. was founded in 1919 and is headquartered in Kansas City, Missouri.
BAB, Inc. franchises and licenses bagel and muffin retail units under the BAB, MFM, and SD trade names in the United States. Its BAB franchised brand consists of units operating as Big Apple Bagels featuring daily baked bagels, flavored cream cheeses, premium coffee, gourmet bagel sandwiches, and other related products. The company's MFM brand consists of units operating as My Favorite Muffin featuring various freshly baked muffins, coffee, and related products; and units operating as My Favorite Muffin and Bagel Cafe featuring freshly baked muffins, coffee, and related products, as well as various specialty bagel sandwiches and related products. Its SD brand includes SweetDuet Frozen Yogurt and Gourmet Muffins brand that offers frozen yogurt and gourmet muffins. As of November 30, 2017, the company had 82 franchise units and 3 licensed units in operation in 23 states and the United Arab Emirates. It is also involved in the sale of bagels, muffins, and coffee through nontraditional channels of distribution, including under licensing agreements. BAB, Inc. was incorporated in 2000 and is based in Deerfield, Illinois.
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