Kraft Heinz Foods (HNZ) versus Dean Foods (DF) Critical Comparison

Kraft Heinz Foods (NYSE: HNZ) and Dean Foods (NYSE:DF) are both non-cyclical consumer goods & services companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, valuation, dividends, institutional ownership and earnings.

Dividends

Dean Foods pays an annual dividend of $0.36 per share and has a dividend yield of 3.0%. Kraft Heinz Foods does not pay a dividend. 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.

Insider and Institutional Ownership

94.2% of Dean Foods shares are held by institutional investors. 1.2% of Dean Foods shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Kraft Heinz Foods and Dean Foods’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kraft Heinz Foods N/A N/A N/A
Dean Foods 0.53% 14.04% 3.35%

Earnings and Valuation

This table compares Kraft Heinz Foods and Dean Foods’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kraft Heinz Foods N/A N/A N/A $3.26 5.71
Dean Foods $7.71 billion 0.14 $119.92 million $0.46 26.00

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Kraft Heinz Foods and Dean Foods, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kraft Heinz Foods 0 2 1 0 2.33
Dean Foods 2 6 3 0 2.09

Kraft Heinz Foods currently has a consensus target price of $17.65, indicating a potential downside of 5.11%. Dean Foods has a consensus target price of $13.06, indicating a potential upside of 9.16%. Given Dean Foods’ higher possible upside, analysts clearly believe Dean Foods is more favorable than Kraft Heinz Foods.

Summary

Dean Foods beats Kraft Heinz Foods on 9 of the 12 factors compared between the two stocks.

About Kraft Heinz Foods

H. J. Heinz Company, together with its subsidiaries, is engaged in manufacturing and marketing a range of food products throughout the world. The Company’s principal products include ketchup, condiments and sauces, frozen food, soups, beans and pasta meals, infant nutrition and other food products. The Company’s products are manufactured and packaged to provide wholesome foods for consumers, as well as foodservice and institutional customers. The Company manufactures and contracts for the manufacture of its products from a variety of raw food materials. The Company operates in five segments: North American Consumer Products, Europe, Asia/Pacific, U.S. Foodservice and Rest of World. The Company owns or leases office space, warehouses, distribution centers and research and other facilities throughout the world.

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.

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