J. M. Smucker (NYSE:SJM) and Sysco (NYSE:SYY) Critical Survey

J. M. Smucker (NYSE:SJM) and Sysco (NYSE:SYY) are both large-cap consumer staples companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, analyst recommendations, risk, dividends, institutional ownership and profitability.

Dividends

J. M. Smucker pays an annual dividend of $4.40 per share and has a dividend yield of 4.4%. Sysco pays an annual dividend of $2.16 per share and has a dividend yield of 3.0%. J. M. Smucker pays out -37.3% of its earnings in the form of a dividend. Sysco pays out 59.8% 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. J. M. Smucker has raised its dividend for 27 consecutive years and Sysco has raised its dividend for 57 consecutive years. J. M. Smucker is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares J. M. Smucker and Sysco”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
J. M. Smucker	$8.73 billion	1.23	-$1.23 billion	($11.79)	-8.52
Sysco	$81.37 billion	0.43	$1.83 billion	$3.61	20.09

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

Profitability

This table compares J. M. Smucker and Sysco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
J. M. Smucker	-14.07%	15.94%	5.37%
Sysco	2.08%	103.57%	8.06%

Risk & Volatility

J. M. Smucker has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500. Comparatively, Sysco has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for J. M. Smucker and Sysco, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
J. M. Smucker	1	9	11	0	2.48
Sysco	0	7	9	0	2.56

J. M. Smucker currently has a consensus price target of $116.59, suggesting a potential upside of 16.05%. Sysco has a consensus price target of $88.15, suggesting a potential upside of 21.54%. Given Sysco’s stronger consensus rating and higher probable upside, analysts plainly believe Sysco is more favorable than J. M. Smucker.

Insider & Institutional Ownership

81.7% of J. M. Smucker shares are held by institutional investors. Comparatively, 83.4% of Sysco shares are held by institutional investors. 2.2% of J. M. Smucker shares are held by company insiders. Comparatively, 0.6% of Sysco shares are held 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

Sysco beats J. M. Smucker on 12 of the 17 factors compared between the two stocks.

About J. M. Smucker

The J. M. Smucker Company manufactures and markets branded food and beverage products worldwide. It operates in three segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S. Retail Consumer Foods. The company offers mainstream roast, ground, single serve, and premium coffee; peanut butter and specialty spreads; fruit spreads, toppings, and syrups; jelly products; nut mix products; shortening and oils; frozen sandwiches and snacks; pet food and pet snacks; and foodservice hot beverage, foodservice portion control, and flour products, as well as dog and cat food, frozen handheld products, juices and beverages, and baking mixes and ingredients. It provides its products under the Meow Mix, Milk-Bone, Pup-Peroni, Canine Carry Outs, Folgers, Café Bustelo, Dunkin', Folgers, Café Bustelo, 1850, Jif, Smucker's, Smucker's Uncrustables, Robin Hood, and Five Roses. The company sells its products through direct sales and brokers to food retailers, club stores, discount and dollar stores, online retailers, pet specialty stores, natural foods stores and distributors, drug stores, military commissaries, and mass merchandisers. Smucker Company was founded in 1897 and is headquartered in Orrville, Ohio.

About Sysco

Sysco Corporation, through its subsidiaries, engages in the marketing and distribution of various food and related products to the foodservice or food-away-from-home industry in the United States, Canada, the United Kingdom, France, and internationally. It operates through U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Other segments. The company distributes frozen food, such as meat, seafood, fully prepared entrées, fruits, vegetables, and desserts; canned and dry food products; fresh meat and seafood products; dairy products; beverages; imported specialties; and fresh produce products. It also supplies various non-food items, including paper products comprising disposable napkins, plates, and cups; tableware consisting of glassware and silverware; cookware, such as pots, pans, and utensils; restaurant and kitchen equipment and supplies; and cleaning supplies. The company serves restaurants, hospitals and nursing facilities, schools and colleges, hotels and motels, industrial caterers, and other foodservice venues. Sysco Corporation was incorporated in 1969 and is headquartered in Houston, Texas.