Critical Contrast: Darling Ingredients (DAR) and B&G Foods (BGS)

Darling Ingredients (NYSE: DAR) and B&G Foods (NYSE:BGS) are both mid-cap non-cyclical consumer goods & services companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, earnings, profitability, analyst recommendations, risk, institutional ownership and valuation.

Dividends

B&G Foods pays an annual dividend of $1.86 per share and has a dividend yield of 5.4%. Darling Ingredients does not pay a dividend. B&G Foods pays out 122.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Darling Ingredients has raised its dividend for 6 consecutive years.

Volatility and Risk

Darling Ingredients has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500. Comparatively, B&G Foods has a beta of 0.18, suggesting that its stock price is 82% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Darling Ingredients and B&G Foods, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Darling Ingredients 0 1 4 0 2.80
B&G Foods 0 2 6 0 2.75

Darling Ingredients currently has a consensus target price of $19.40, suggesting a potential upside of 6.59%. B&G Foods has a consensus target price of $40.75, suggesting a potential upside of 17.77%. Given B&G Foods’ higher possible upside, analysts clearly believe B&G Foods is more favorable than Darling Ingredients.

Profitability

This table compares Darling Ingredients and B&G Foods’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Darling Ingredients 1.76% 2.96% 1.32%
B&G Foods 6.29% 15.50% 3.92%

Institutional & Insider Ownership

97.8% of Darling Ingredients shares are held by institutional investors. Comparatively, 93.9% of B&G Foods shares are held by institutional investors. 2.0% of Darling Ingredients shares are held by insiders. Comparatively, 2.1% of B&G Foods shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Darling Ingredients and B&G Foods’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Darling Ingredients $3.40 billion 0.88 $102.31 million $0.38 47.89
B&G Foods $1.39 billion 1.65 $109.42 million $1.52 22.76

B&G Foods has lower revenue, but higher earnings than Darling Ingredients. B&G Foods is trading at a lower price-to-earnings ratio than Darling Ingredients, indicating that it is currently the more affordable of the two stocks.

Summary

B&G Foods beats Darling Ingredients on 10 of the 17 factors compared between the two stocks.

About Darling Ingredients

Darling Ingredients Inc. (Darling) is a developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a range of ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy and fertilizer industries. The Company operates through three segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. The Company collects and transforms all aspects of animal by-product streams into useable and specialty ingredients, such as gelatin, edible fats, feed-grade fats, animal proteins and meals, plasma, pet food ingredients, organic fertilizers, yellow grease, fuel feedstocks, green energy, natural casings and hides. In addition, the Company provides grease trap services to food service establishments, environmental services to food processors and sells restaurant cooking oil delivery and collection equipment.

About B&G Foods

B&G Foods, Inc. (B&G Foods) is a holding company. The Company manufactures, sells and distributes a portfolio of shelf-stable and frozen foods across the United States, Canada and Puerto Rico. Its products include frozen and canned vegetables, hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, pizza crusts, Mexican-style sauces, dry soups, taco shells and kits, salsas, pickles, peppers, tomato-based products, puffed corn and rice snacks, nut clusters and other specialty products. Its products are marketed under various brands, including Ac’cent, B&G, B&M, Baker’s Joy, Bear Creek Country Kitchens, Brer Rabbit, Canoleo, Cary’s, Cream of Rice, Cream of Wheat, Devonsheer, Don Pepino, Durkee, New York Style, Old London, Original Tings, Ortega, Spice Islands, Spring Tree, Static Guard, Sugar Twin, Tone’s, Trappey’s, TrueNorth, Underwood, Vermont Maid, Victoria, Weber and Wright’s.

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