Conagra Brands, Inc. (NYSE:CAG) and B&G Foods, Inc. (NYSE:BGS) are both Consumer Goods companies that recently hit new low. Naturally, this has created a bit of a stir amongst investors. We will compare the two companies across various metrics including growth, profitability, risk, return, dividends, and valuation to determine if one is a better choice than the other.
Conagra Brands, Inc. (NYSE:CAG) operates in the Processed & Packaged Goods segment of the Consumer Goods sector. The company has grown sales at a -10.10% annual rate over the past five years, putting it in the low growth category. CAG has a net profit margin of 9.00% and is more profitable than the average company in the Processed & Packaged Goods industry. In terms of efficiency, CAG has an asset turnover ratio of 0.71. This figure represents the amount of revenue a company generates per dollar of assets. CAG’s financial leverage ratio is 1.77, which indicates that the company’s asset base is primarily funded by equity capital. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 18.00%, which is better than the Processed & Packaged Goods industry average ROE.
Conagra Brands, Inc. (CAG) pays out an annual dividend of 0.85 per share. At the current valuation, this equates to a dividend yield of 2.39%. The company has a payout ratio of 50.90%. CAG’s current dividend therefore should be sustainable. Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 0.79. All else equal, companies with higher FCF yields are viewed as cheaper. Company trades at a P/E ratio of 21.17, and is less expensive than the average stock in the Processed & Packaged Goods industry. The average investment recommendation for CAG, taken from a group of Wall Street Analysts, is 2.00, or a buy.
Over the past three months, Conagra Brands, Inc. insiders have been net buyers, dumping a net of -146,501 shares. This implies that insiders have been feeling relatively bearish about the outlook for CAG. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. CAG has a beta of 0.35 and therefore an below average level of market volatility.
B&G Foods, Inc. (NYSE:BGS) operates in the Processed & Packaged Goods segment of the Consumer Goods sector. BGS has increased sales at a 20.70% CAGR over the past five years, and is considered a high growth stock. The company has a net profit margin of 6.30% and is more profitable than the average Processed & Packaged Goods player. BGS’s asset turnover ratio is 0.52 and the company has financial leverage of 3.08. BGS’s return on equity of 12.80% is worse than the Processed & Packaged Goods industry average.
B&G Foods, Inc. (BGS) pays a dividend of 1.86, which translates to dividend yield of 5.72% based on the current price. Stock has a payout ratio of 119.30%. According to this ratio, BGS should be able to continue making payouts at these levels. The company trades at a free cash flow yield of -2.74 and has a P/E of 21.44. Compared to the average company in the 21.61 space, BGS is relatively cheap. The average analyst recommendation for BGS is 2.10, or a buy. The average analyst recommendation for BGS is 2.10, or a buy.
B&G Foods, Inc. insiders have sold a net of 0 shares during the past three months, which implies that the company’s top executives have been feeling bearish about the stock’s outlook. Finally, BGS’s beta of 0.11 indicates that the stock has an below average level of market risk.
Conagra Brands, Inc. (NYSE:CAG) scores higher than B&G Foods, Inc. (NYSE:BGS) on 8 of the 13 measures compared between the two companies. CAG has the better fundamentals, scoring higher on profitability, efficiency, leverage and return metrics. CAG wins on valuation measures.