Reviewing BAB (OTCMKTS:BABB) and Kraft Heinz (NASDAQ:KHC)

BAB (OTCMKTS:BABB) and Kraft Heinz (NASDAQ:KHC) are both consumer staples companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.

Earnings and Valuation

This table compares BAB and Kraft Heinz”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BAB	$3.44 million	2.08	$560,000.00	$0.08	12.31
Kraft Heinz	$24.94 billion	1.14	-$5.85 billion	($4.94)	-4.85

BAB has higher earnings, but lower revenue than Kraft Heinz. Kraft Heinz is trading at a lower price-to-earnings ratio than BAB, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares BAB and Kraft Heinz’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BAB	16.25%	16.81%	11.65%
Kraft Heinz	-23.44%	7.07%	3.68%

Dividends

BAB pays an annual dividend of $0.04 per share and has a dividend yield of 4.1%. Kraft Heinz pays an annual dividend of $1.60 per share and has a dividend yield of 6.7%. BAB pays out 50.0% of its earnings in the form of a dividend. Kraft Heinz pays out -32.4% 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. Kraft Heinz is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

78.2% of Kraft Heinz shares are held by institutional investors. 33.7% of BAB shares are held by company insiders. Comparatively, 0.4% of Kraft Heinz shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for BAB and Kraft Heinz, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BAB	0	0	0	0	0.00
Kraft Heinz	6	14	0	1	1.81

Kraft Heinz has a consensus price target of $25.00, indicating a potential upside of 4.38%. Given Kraft Heinz’s stronger consensus rating and higher possible upside, analysts clearly believe Kraft Heinz is more favorable than BAB.

Volatility and Risk

BAB has a beta of 0.22, indicating that its share price is 78% less volatile than the S&P 500. Comparatively, Kraft Heinz has a beta of 0.08, indicating that its share price is 92% less volatile than the S&P 500.

Summary

BAB beats Kraft Heinz on 9 of the 16 factors compared between the two stocks.

About BAB

BAB, Inc. franchises and licenses bagel and muffin retail units under the Big Apple Bagels (BAB), My Favorite Muffin (MFM), and SweetDuet (SD) trade names in the United States. It's BAB franchised brand includes daily baked bagels, flavored cream cheeses, premium coffees, gourmet bagel sandwiches, and other related products; and MFM brand comprises various freshly baked muffins and coffees, as well as units operating as My Favorite Muffin Your All Day Bakery Café features specialty bagel sandwiches and related products. The company's SD brand includes frozen yogurt products. BAB, Inc. was founded in 1993 and is based in Deerfield, Illinois.

About Kraft Heinz

The Kraft Heinz Company, together with its subsidiaries, manufactures and markets food and beverage products in North America and internationally. Its products include condiments and sauces, cheese and dairy products, meals, meats, refreshment beverages, coffee, and other grocery products under the Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Ore-Ida, Maxwell House, Kool-Aid, Jell-O, Heinz, ABC, Master, Quero, Kraft, Golden Circle, Wattie's, Pudliszki, and Plasmon brands. It sells its products through its own sales organizations, as well as through independent brokers, agents, and distributors to chain, wholesale, cooperative, and independent grocery accounts; convenience, value, and club stores; pharmacies and drug stores; mass merchants; foodservice distributors; institutions, including hotels, restaurants, bakeries, hospitals, health care facilities, and government agencies; and online through various e-commerce platforms and retailers. The company was formerly known as H.J. Heinz Holding Corporation and changed its name to The Kraft Heinz Company in July 2015. The Kraft Heinz Company was founded in 1869 and is based in Pittsburgh, Pennsylvania.