Reviewing Flowers Foods (FLO) and Nestlé (NSRGY)

Flowers Foods (NYSE: FLO) and Nestlé (OTCMKTS:NSRGY) are both consumer staples companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Profitability

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This table compares Flowers Foods and Nestlé’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Flowers Foods 3.83% 15.17% 6.95%
Nestlé N/A N/A N/A

Institutional and Insider Ownership

62.2% of Flowers Foods shares are held by institutional investors. Comparatively, 1.4% of Nestlé shares are held by institutional investors. 15.2% of Flowers Foods shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Flowers Foods and Nestlé’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Flowers Foods $3.92 billion 1.22 $150.12 million $0.89 25.49
Nestlé $91.22 billion 2.66 $7.30 billion $3.41 22.82

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

Risk & Volatility

Flowers Foods has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500. Comparatively, Nestlé has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Flowers Foods and Nestlé, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Flowers Foods 0 5 3 0 2.38
Nestlé 0 2 0 0 2.00

Flowers Foods currently has a consensus target price of $22.25, suggesting a potential downside of 1.94%. Given Flowers Foods’ stronger consensus rating and higher probable upside, equities analysts clearly believe Flowers Foods is more favorable than Nestlé.

Dividends

Flowers Foods pays an annual dividend of $0.68 per share and has a dividend yield of 3.0%. Nestlé pays an annual dividend of $1.92 per share and has a dividend yield of 2.5%. Flowers Foods pays out 76.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Nestlé pays out 56.3% of its earnings in the form of a dividend. Flowers Foods has increased its dividend for 12 consecutive years. Flowers Foods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Flowers Foods beats Nestlé on 12 of the 17 factors compared between the two stocks.

Flowers Foods Company Profile

Flowers Foods, Inc. is a producer and marketer of packaged bakery products. The Company operates in two segments: direct-store-delivery segment (DSD Segment) and warehouse delivery segment (Warehouse Segment). The DSD segment produces fresh breads, buns, rolls, tortillas and snack cakes sold primarily by a network of independent distributors to retail and foodservice customers in the areas of the United States: East, South, Southwest, California, and select markets in the Midwest, Pacific Northwest, Nevada, and Colorado. The Warehouse Segment produces snack cakes, breads and rolls that are shipped both fresh and frozen to national retail, foodservice, vending, and co-pack customers through their warehouse channels. The Warehouse Segment supplies national and regional restaurants, institutions and foodservice distributors, and retail in-store bakeries with breads and rolls. It also sells packaged bakery products to wholesale distributors for ultimate sale to a range of food outlets.

Nestlé Company Profile

Nestlé S.A., together with its subsidiaries, operates as a food and beverage company. The company operates through Zone Europe, Middle East and North Africa; Zone Americas; Zone Asia, Oceania and sub-Saharan Africa; Nestlé Waters; and Nestlé Nutrition segments. It offers baby foods under the Cerelac, Gerber, Gerber Graduates, NaturNes, and Nestum brands; bottled water under the Nestlé Pure Life, Perrier, Poland Spring, and S.Pellegrino brands; cereals under the Chocapic, Cini Minis, Cookie Crisp, Estrelitas, Fitness, and Nesquik Cereal brands; and chocolate and confectionery products under the Smarties, Cailler, Butterfinger, Crunch, Aero, KitKat, Nestle Toll House, Wonka, and Orion brands. The company also provides coffee products under the Nescafé, Nescafé Dolce Gusto, Nespresso, Nescafé original, Coffee-Mate, Nescafé Original 3 in 1, Nescafé Gold Blend, Nescafé Shakissimo, and Nescafé Cappuccino brands; culinary, chilled, and frozen foods under the Maggi, Stouffer's, Hot Pockets, Buitoni, DiGiorno, Jacks, Herta, TombStone, Thomy, and Lean Cuisine brands; dairy products under the Carnation, Nido, Coffee-Mate, and La Laitière brands; and drinks under the Nesquik, Nestea, and Milo brands. In addition, it offers food service products under the Chef, Chef-Mate, Maggi, Milo, Minor's, Nescafé, Nestea, Sjora, Lean Cuisine, and Stouffer's brand names; healthcare nutrition products under the Boost, Nutren Junior, Peptamen, and Resource brands; ice cream products under the Dreyer's, Extrême, Häagen-Dazs, Mövenpick, and Nestlé Ice Cream brands; and petcare products under the Purina Cat Chow, Alpo, Felix, ONE, Pro Plan, Chef Michael's, Gourmet, Fancy Feast, Beneful, Dog Chow, Bakers Complete, and Friskies brands. The company was founded in 1866 and is headquartered in Vevey, Switzerland.

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