Analyzing McCormick & Company, Incorporated (NYSE:MKC) and J. M. Smucker (NYSE:SJM)

McCormick & Company, Incorporated (NYSE:MKC) and J. M. Smucker (NYSE:SJM) are both large-cap consumer staples companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, profitability, risk, analyst recommendations and dividends.

Valuation and Earnings

This table compares McCormick & Company, Incorporated and J. M. Smucker”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
McCormick & Company, Incorporated	$6.84 billion	2.00	$789.40 million	$6.01	8.49
J. M. Smucker	$9.05 billion	1.36	-$138.70 million	($1.30)	-88.88

McCormick & Company, Incorporated has higher earnings, but lower revenue than J. M. Smucker. J. M. Smucker is trading at a lower price-to-earnings ratio than McCormick & Company, Incorporated, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

McCormick & Company, Incorporated has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, J. M. Smucker has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500.

Profitability

This table compares McCormick & Company, Incorporated and J. M. Smucker’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
McCormick & Company, Incorporated	21.91%	12.78%	5.76%
J. M. Smucker	-1.53%	17.18%	5.76%

Dividends

McCormick & Company, Incorporated pays an annual dividend of $1.92 per share and has a dividend yield of 3.8%. J. M. Smucker pays an annual dividend of $4.40 per share and has a dividend yield of 3.8%. McCormick & Company, Incorporated pays out 31.9% of its earnings in the form of a dividend. J. M. Smucker pays out -338.5% 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. McCormick & Company, Incorporated has increased its dividend for 38 consecutive years and J. M. Smucker has increased its dividend for 27 consecutive years. J. M. Smucker is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

79.7% of McCormick & Company, Incorporated shares are held by institutional investors. Comparatively, 81.7% of J. M. Smucker shares are held by institutional investors. 10.6% of McCormick & Company, Incorporated shares are held by insiders. Comparatively, 2.2% of J. M. Smucker shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for McCormick & Company, Incorporated and J. M. Smucker, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
McCormick & Company, Incorporated	1	6	6	0	2.38
J. M. Smucker	1	9	10	0	2.45

McCormick & Company, Incorporated currently has a consensus target price of $60.50, suggesting a potential upside of 18.62%. J. M. Smucker has a consensus target price of $121.13, suggesting a potential upside of 4.83%. Given McCormick & Company, Incorporated’s higher possible upside, equities analysts plainly believe McCormick & Company, Incorporated is more favorable than J. M. Smucker.

Summary

McCormick & Company, Incorporated beats J. M. Smucker on 9 of the 16 factors compared between the two stocks.

About McCormick & Company, Incorporated

McCormick & Co., Inc. engages in the manufacturing, marketing, and distribution of spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. It operates through the Consumer and Flavor Solutions segments. The Consumer segment sells spices, seasonings, condiments, and sauces. The Flavor Solutions segment includes seasoning blends, spices and herbs, condiments, coating systems, and compound flavors. The company was founded by Willoughby M. McCormick in 1889 and is headquartered in Baltimore, MD.

About J. M. Smucker

The J. M. Smucker Company manufactures and markets branded food and beverage products worldwide. It operates in three segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S. Retail Consumer Foods. The company offers mainstream roast, ground, single serve, and premium coffee; peanut butter and specialty spreads; fruit spreads, toppings, and syrups; jelly products; nut mix products; shortening and oils; frozen sandwiches and snacks; pet food and pet snacks; and foodservice hot beverage, foodservice portion control, and flour products, as well as dog and cat food, frozen handheld products, juices and beverages, and baking mixes and ingredients. It provides its products under the Meow Mix, Milk-Bone, Pup-Peroni, Canine Carry Outs, Folgers, Café Bustelo, Dunkin', Folgers, Café Bustelo, 1850, Jif, Smucker's, Smucker's Uncrustables, Robin Hood, and Five Roses. The company sells its products through direct sales and brokers to food retailers, club stores, discount and dollar stores, online retailers, pet specialty stores, natural foods stores and distributors, drug stores, military commissaries, and mass merchandisers. Smucker Company was founded in 1897 and is headquartered in Orrville, Ohio.