Hormel Foods (NYSE:HRL) versus Coffee (NASDAQ:JVA) Critical Survey

Hormel Foods (NYSE:HRL) and Coffee (NASDAQ:JVA) are both consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Volatility and Risk

Hormel Foods has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500. Comparatively, Coffee has a beta of 1.44, meaning that its stock price is 44% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Hormel Foods and Coffee, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hormel Foods	1	6	2	0	2.11
Coffee	0	2	0	0	2.00

Hormel Foods currently has a consensus target price of $26.14, suggesting a potential upside of 24.79%. Coffee has a consensus target price of $9.50, suggesting a potential upside of 176.97%. Given Coffee’s higher probable upside, analysts plainly believe Coffee is more favorable than Hormel Foods.

Profitability

This table compares Hormel Foods and Coffee’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hormel Foods	2.82%	9.91%	5.89%
Coffee	1.53%	5.41%	3.61%

Valuation & Earnings

This table compares Hormel Foods and Coffee”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hormel Foods	$12.11 billion	0.95	$478.20 million	$0.63	33.25
Coffee	$96.28 million	0.20	$1.40 million	$0.28	12.25

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

Institutional & Insider Ownership

41.0% of Hormel Foods shares are owned by institutional investors. 0.6% of Hormel Foods shares are owned by insiders. Comparatively, 22.1% of Coffee shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Hormel Foods pays an annual dividend of $1.17 per share and has a dividend yield of 5.6%. Coffee pays an annual dividend of $0.08 per share and has a dividend yield of 2.3%. Hormel Foods pays out 185.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Coffee pays out 28.6% of its earnings in the form of a dividend. Hormel Foods has raised its dividend for 60 consecutive years. Hormel Foods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Hormel Foods beats Coffee on 13 of the 17 factors compared between the two stocks.

About Hormel Foods

Hormel Foods Corporation develops, processes, and distributes various meat, nuts, and other food products to retail, foodservice, deli, and commercial customers in the United States and internationally. It operates through three segments: Retail, Foodservice, and International segments. The company provides various perishable products that include fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles, and bacons; and shelf-stable products comprising canned luncheon meats, nut butters, snack nuts, chili, shelf-stable microwaveable meals, hash, stews, tortillas, salsas, tortilla chips, nutritional food supplements, and others. It sells its products under the HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, BURKE, CAFÉ H, CERATTI, CHI-CHI'S, COLUMBUS, COMPLEATS, CORN NUTS, CURE 81, DAN'S PRIZE, DI LUSSO, DINTY MOORE, DON MIGUEL, DOÑA MARIA, EMBASA, FAST N EASY, FIRE BRAISED, FONTANINI, HAPPY LITTLE PLANTS, HERDEZ, HORMEL GATHERINGS, HORMEL SQUARE TABLE, HORMEL VITAL CUISINE, HOUSE OF TSANG, JENNIE-O, JUSTIN'S, LA VICTORIA, LAYOUT, LLOYD'S, MARY KITCHEN, MR. PEANUT, NATURAL CHOICE, NUT-RITION, OLD SMOKEHOUSE, OVEN READY, PILLOW PACK, PLANTERS, ROSA GRANDE, SADLER'S SMOKEHOUSE, SKIPPY, SPAM, SPECIAL RECIPE, THICK & EASY, VALLEY FRESH, AND WHOLLY brands through sales personnel, independent brokers, and distributors. The company was formerly known as Geo. A. Hormel & Company and changed its name to Hormel Foods Corporation in January 1995. Hormel Foods Corporation was founded in 1891 and is headquartered in Austin, Minnesota.

About Coffee

Coffee Holding Co., Inc. engages in manufacturing, roasting, packaging, marketing, and distributing roasted and blended coffees in the United States, Australia, Canada, England, and China. It offers wholesale green coffee products, including unroasted raw beans that are sold to large, medium, and small roasters, as well as coffee shop operators; and roasts, blends, packages, and sells coffee under private labels in cans, brick packages, and instants of various sizes. The company also roasts and blends company label branded coffee to supermarkets, wholesalers, and individually owned stores; and sells tabletop coffee roasting equipment, instant coffees, and tea products for its customers. Its coffee brands include Cafe Caribe, Don Manuel, S&W, Cafe Supremo, Via Roma, Premier Roasters, and Harmony Bay. The company was formerly known as Transpacific International Group Corp and changed its name to Coffee Holding Co., Inc. in April 1998. Coffee Holding Co., Inc. was founded in 1971 and is headquartered in Staten Island, New York.