Analyzing Greencore Group (GNCGY) and Medifast (MED)

Greencore Group (OTCMKTS: GNCGY) and Medifast (NYSE:MED) are both small-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.

Earnings & Valuation

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This table compares Greencore Group and Medifast’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Greencore Group $2.94 billion 0.45 $15.46 million $0.78 9.64
Medifast $301.56 million 3.85 $27.72 million $2.29 42.47

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

Risk and Volatility

Greencore Group has a beta of 1.96, suggesting that its share price is 96% more volatile than the S&P 500. Comparatively, Medifast has a beta of 0.28, suggesting that its share price is 72% less volatile than the S&P 500.

Profitability

This table compares Greencore Group and Medifast’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Greencore Group N/A N/A N/A
Medifast 9.19% 26.39% 20.81%

Dividends

Greencore Group pays an annual dividend of $0.25 per share and has a dividend yield of 3.3%. Medifast pays an annual dividend of $1.92 per share and has a dividend yield of 2.0%. Greencore Group pays out 32.1% of its earnings in the form of a dividend. Medifast pays out 83.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Greencore Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

0.0% of Greencore Group shares are held by institutional investors. Comparatively, 88.1% of Medifast shares are held by institutional investors. 6.5% of Medifast 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 Greencore Group and Medifast, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Greencore Group 0 0 0 0 N/A
Medifast 0 0 2 0 3.00

Medifast has a consensus target price of $81.50, suggesting a potential downside of 16.20%. Given Medifast’s higher possible upside, analysts plainly believe Medifast is more favorable than Greencore Group.

Summary

Medifast beats Greencore Group on 11 of the 15 factors compared between the two stocks.

About Greencore Group

Greencore Group plc produces and sells various food products primarily in the United Kingdom and the United States. It operates through Convenience Foods UK & Ireland, Convenience Foods US, and Ingredients and Property segments. The company provides sandwiches, wraps, rolls, sub-rolls, flatbreads, baguettes, bagels, prepared salads, and sushi products; and prepared meals, such as chilled ready meals, chilled sauces and soups, and quiches. It also offers grocery products comprising cooking sauces, table sauces, pickles, Yorkshire puddings, cakes, and desserts, as well as various convenience food products; and frozen breakfast sandwiches, kid, frozen sandwiches, and salad kits. It provides its products primarily through retailers, coffee shops, grocery stores, convenience stores, supermarket and high street chains, and petrol forecourts. Greencore Group plc was founded in 1991 and is headquartered in Dublin, Ireland.

About Medifast

Medifast, Inc., through its subsidiaries, produces, distributes, and sells weight loss, weight management, healthy living products, and other consumable health and nutritional products. The company offers bars, bites, pretzels, puffs, oatmeal and cereal crunch products, drinks, hearty choices, pancakes, puddings, soft serves, shakes, smoothies, soft bakes, and soups under the Medifast, OPTAVIA, Thrive by Medifast, Optimal Health by OPTAVIA, Flavors of Home, and Essential 1 brands. It also provides meal replacements comprising vitamins and minerals; and hydration products, as well as other nutrients for health purposes. As of December 31, 2017, Medifast, Inc. operated 16 franchised Medifast weight control centers in Arizona, California, Louisiana, Minnesota, and Wisconsin; and 18 reseller locations in California, Maryland, and Pennsylvania. The company sells its products through various channels, including the Internet, call centers, independent health advisors, medical professionals, franchise weight loss clinics, and direct consumer marketing. Medifast, Inc. was founded in 1980 and is headquartered in Baltimore, Maryland.

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