Critical Survey: Medifast (NYSE:MED) vs. Marzetti (NASDAQ:MZTI)

Marzetti (NASDAQ:MZTI) and Medifast (NYSE:MED) are both consumer staples companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, risk, profitability and valuation.

Risk and Volatility

Marzetti has a beta of 0.4, suggesting that its share price is 60% less volatile than the S&P 500. Comparatively, Medifast has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.

Earnings & Valuation

This table compares Marzetti and Medifast”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Marzetti	$1.94 billion	2.43	$167.35 million	$6.16	27.80
Medifast	$429.70 million	0.29	$2.09 million	$0.01	1,137.50

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

Profitability

This table compares Marzetti and Medifast’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Marzetti	8.77%	18.87%	14.77%
Medifast	0.76%	2.00%	1.50%

Dividends

Marzetti pays an annual dividend of $3.80 per share and has a dividend yield of 2.2%. Medifast pays an annual dividend of $6.60 per share and has a dividend yield of 58.0%. Marzetti pays out 61.7% of its earnings in the form of a dividend. Medifast pays out 66,000.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Marzetti has increased its dividend for 62 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Marzetti and Medifast, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Marzetti	0	3	1	0	2.25
Medifast	1	1	0	0	1.50

Marzetti currently has a consensus target price of $191.33, indicating a potential upside of 11.72%. Medifast has a consensus target price of $16.50, indicating a potential upside of 45.05%. Given Medifast’s higher possible upside, analysts clearly believe Medifast is more favorable than Marzetti.

Institutional and Insider Ownership

66.4% of Marzetti shares are owned by institutional investors. Comparatively, 95.5% of Medifast shares are owned by institutional investors. 29.1% of Marzetti shares are owned by company insiders. Comparatively, 2.9% of Medifast shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Marzetti beats Medifast on 12 of the 17 factors compared between the two stocks.

About Marzetti

Lancaster Colony Corporation engages in the manufacturing and marketing of specialty food products for the retail and foodservice channels in the United States. It operates in two segments, Retail and Foodservice. The company offers frozen garlic bread under the New York BRAND Bakery; frozen Parkerhouse style yeast and dinner rolls under the Sister Schubert's brand; salad dressings under the Marzetti, Simply Dressed, Cardini's, and Girard's brands; vegetable and fruit dips under the Marzetti brand; croutons and salad toppings under the New York BRAND Bakery, Chatham Village, and Marzetti brands; and frozen pasta under the Marzetti Frozen Pasta brand. It also manufactures and sells other products to brand license agreements, including Olive Garden dressings, Buffalo Wild Wings sauces, and Chick-fil-A sauces. The company sells its products through sales personnel, food brokers, and distributors to retailers and restaurants. Lancaster Colony Corporation was incorporated in 1961 and is based in Westerville, Ohio.

About Medifast

Medifast, Inc., through its subsidiaries, engages in the manufacture and sale of weight loss, weight management, and healthy living products in the United States and the Asia-Pacific. It offers bars, puffs, cereal, crunchers, drinks, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups under the OPTAVIA, OPTAVIA ACTIVE, and Optimal Health brand names. The company markets its products through point-of-sale transactions, as well as through ecommerce platform. Medifast, Inc. was founded in 1980 and is headquartered in Baltimore, Maryland.