Head-To-Head Contrast: Lamb Weston (LW) vs. Lancaster Colony (LANC)

Lamb Weston (NYSE: LW) and Lancaster Colony (NASDAQ:LANC) are both mid-cap consumer staples companies, but which is the better stock? We will compare the two companies based on the strength of their risk, institutional ownership, analyst recommendations, earnings, dividends, valuation and profitability.

Valuation and Earnings

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This table compares Lamb Weston and Lancaster Colony’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lamb Weston $3.17 billion 2.85 $324.80 million $2.32 26.63
Lancaster Colony $1.20 billion 2.81 $115.31 million $4.62 26.59

Lamb Weston has higher revenue and earnings than Lancaster Colony. Lancaster Colony is trading at a lower price-to-earnings ratio than Lamb Weston, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Lamb Weston and Lancaster Colony’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lamb Weston 11.75% -69.53% 14.24%
Lancaster Colony 9.84% 19.65% 15.67%

Dividends

Lamb Weston pays an annual dividend of $0.76 per share and has a dividend yield of 1.2%. Lancaster Colony pays an annual dividend of $2.40 per share and has a dividend yield of 2.0%. Lamb Weston pays out 32.8% of its earnings in the form of a dividend. Lancaster Colony pays out 51.9% 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. Lancaster Colony has raised its dividend for 55 consecutive years. Lancaster Colony is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Lamb Weston and Lancaster Colony, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lamb Weston 0 2 3 1 2.83
Lancaster Colony 0 0 3 0 3.00

Lamb Weston currently has a consensus price target of $59.17, suggesting a potential downside of 4.23%. Lancaster Colony has a consensus price target of $153.00, suggesting a potential upside of 24.56%. Given Lancaster Colony’s stronger consensus rating and higher probable upside, analysts clearly believe Lancaster Colony is more favorable than Lamb Weston.

Volatility and Risk

Lamb Weston has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500. Comparatively, Lancaster Colony has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.

Institutional and Insider Ownership

80.6% of Lamb Weston shares are owned by institutional investors. Comparatively, 53.2% of Lancaster Colony shares are owned by institutional investors. 0.3% of Lamb Weston shares are owned by company insiders. Comparatively, 31.9% of Lancaster Colony shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Lancaster Colony beats Lamb Weston on 9 of the 17 factors compared between the two stocks.

Lamb Weston Company Profile

Lamb Weston Holdings, Inc. produces and markets value-added frozen potato products worldwide. It operates through four segments: Global, Foodservice, Retail, and Other. The company offers frozen potatoes, sweet potatoes, and appetizers under the Lamb Weston brand name, as well as various customer labels. It serves retail and foodservice customers; grocery, mass, club, and specialty retailers; and businesses, independent restaurants, regional chain restaurants, and convenience stores, as well as educational institutions. The company was founded in 1950 and is headquartered in Eagle, Idaho.

Lancaster Colony Company Profile

Lancaster Colony Corporation manufactures and markets specialty food products for the retail and foodservice markets in the United States. It offers salad dressings and sauces under the Marzetti, Marzetti Simply Dressed, Cardini's, and Girard's brands; vegetable dips and fruit dips under the Marzetti brand; frozen garlic breads under the New York BRAND Bakery, Mamma Bella, and Mamma Bella's brands; and frozen Parkerhouse style yeast and dinner rolls under the Sister Schubert's and Mary B's brands. The company also provides dry egg noodles under the Inn Maid and Amish Kitchen brands; frozen specialty noodles under the Reames and Aunt Vi's brands; croutons and salad toppings under the New York BRAND Bakery, New York BRAND Bakery Texas Toast, Chatham Village, Cardini's, Marzetti Simply Dressed, and Marzetti brands; sprouted grain bakery products under the Angelic Bakehouse and Flatzza brands; flatbread wraps and pizza crusts under the Flatout brand; and caviar under the Romanoff brand name. In addition, it manufactures and sells other products to brand license agreements, including Olive Garden's dressings and Jack Daniel's mustards, as well as endorsement agreements, such as Hungry Girl flatbreads. The company's products are sold through sales personnel, food brokers, and distributors to retailers and restaurants, as well as to industrial customers. Lancaster Colony Corporation was founded in 1961 and is based in Westerville, Ohio.

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