Critical Analysis: McCormick & Company, Incorporated (NYSE:MKC) and Cal-Maine Foods (NASDAQ:CALM)

Cal-Maine Foods (NASDAQ:CALM) and McCormick & Company, Incorporated (NYSE:MKC) are both consumer staples companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, institutional ownership, risk and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and target prices for Cal-Maine Foods and McCormick & Company, Incorporated, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cal-Maine Foods	0	5	0	0	2.00
McCormick & Company, Incorporated	0	8	5	0	2.38

Cal-Maine Foods presently has a consensus price target of $94.71, indicating a potential upside of 26.25%. McCormick & Company, Incorporated has a consensus price target of $60.00, indicating a potential upside of 19.14%. Given Cal-Maine Foods’ higher probable upside, research analysts plainly believe Cal-Maine Foods is more favorable than McCormick & Company, Incorporated.

Dividends

Cal-Maine Foods pays an annual dividend of $1.42 per share and has a dividend yield of 1.9%. McCormick & Company, Incorporated pays an annual dividend of $1.92 per share and has a dividend yield of 3.8%. Cal-Maine Foods pays out 21.7% of its earnings in the form of a dividend. McCormick & Company, Incorporated pays out 31.9% 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. Cal-Maine Foods has increased its dividend for 1 consecutive years and McCormick & Company, Incorporated has increased its dividend for 38 consecutive years. McCormick & Company, Incorporated is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Cal-Maine Foods and McCormick & Company, Incorporated”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cal-Maine Foods	$2.91 billion	1.21	$316.68 million	$6.55	11.45
McCormick & Company, Incorporated	$6.84 billion	1.98	$789.40 million	$6.01	8.38

McCormick & Company, Incorporated has higher revenue and earnings than Cal-Maine Foods. McCormick & Company, Incorporated is trading at a lower price-to-earnings ratio than Cal-Maine Foods, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Cal-Maine Foods has a beta of 0.23, meaning that its share price is 77% less volatile than the S&P 500. Comparatively, McCormick & Company, Incorporated has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500.

Institutional & Insider Ownership

84.7% of Cal-Maine Foods shares are held by institutional investors. Comparatively, 79.7% of McCormick & Company, Incorporated shares are held by institutional investors. 3.6% of Cal-Maine Foods shares are held by company insiders. Comparatively, 10.6% of McCormick & Company, Incorporated shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Cal-Maine Foods and McCormick & Company, Incorporated’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cal-Maine Foods	10.88%	11.79%	10.06%
McCormick & Company, Incorporated	21.91%	12.78%	5.76%

Summary

McCormick & Company, Incorporated beats Cal-Maine Foods on 11 of the 17 factors compared between the two stocks.

About Cal-Maine Foods

Cal-Maine Foods, Inc., together with its subsidiaries, produces, grades, packages, markets, and distributes shell eggs. The company offers specialty shell eggs, such as nutritionally enhanced, cage free, organic, free-range, pasture-raised, and brown eggs under the Egg-Land's Best, Land O' Lakes, Farmhouse Eggs, Sunups, Sunny Meadow, and 4Grain brand names. It sells its products to various customers, including national and regional grocery store chains, club stores, independent supermarkets, foodservice distributors, and egg product consumers primarily in the southwestern, southeastern, mid-western, and mid-Atlantic regions of the United States. Cal-Maine Foods, Inc. was founded in 1957 and is headquartered in Ridgeland, Mississippi.

About McCormick & Company, Incorporated

McCormick & Co., Inc. engages in the manufacturing, marketing, and distribution of spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. It operates through the Consumer and Flavor Solutions segments. The Consumer segment sells spices, seasonings, condiments, and sauces. The Flavor Solutions segment includes seasoning blends, spices and herbs, condiments, coating systems, and compound flavors. The company was founded by Willoughby M. McCormick in 1889 and is headquartered in Baltimore, MD.