Contrasting Lifeway Foods (NASDAQ:LWAY) and Hormel Foods (NYSE:HRL)

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

Profitability

This table compares Hormel Foods and Lifeway Foods’ 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%
Lifeway Foods	4.48%	12.66%	9.29%

Risk and Volatility

Hormel Foods has a beta of 0.27, meaning that its stock price is 73% less volatile than the S&P 500. Comparatively, Lifeway Foods has a beta of 0.51, meaning that its stock price is 49% less volatile than the S&P 500.

Insider and Institutional Ownership

41.0% of Hormel Foods shares are owned by institutional investors. Comparatively, 36.4% of Lifeway Foods shares are owned by institutional investors. 0.6% of Hormel Foods shares are owned by company insiders. Comparatively, 18.6% of Lifeway Foods shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Hormel Foods and Lifeway Foods”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hormel Foods	$12.11 billion	0.99	$478.20 million	$0.63	34.70
Lifeway Foods	$212.50 million	1.49	$13.86 million	$0.70	29.84

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Hormel Foods and Lifeway Foods, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hormel Foods	1	6	1	0	2.00
Lifeway Foods	0	1	2	1	3.00

Hormel Foods presently has a consensus target price of $25.43, indicating a potential upside of 16.32%. Lifeway Foods has a consensus target price of $32.50, indicating a potential upside of 55.58%. Given Lifeway Foods’ stronger consensus rating and higher possible upside, analysts plainly believe Lifeway Foods is more favorable than Hormel Foods.

Summary

Lifeway Foods beats Hormel Foods on 11 of the 15 factors compared between the two stocks.

About Hormel Foods

Hormel Foods Corporation is a branded food company that produces and markets meat and other food products for retail, foodservice and other customers. Its offerings include pork, turkey and other meat products, as well as refrigerated and shelf-stable foods. The company’s brands include Hormel, SPAM, Jennie-O, Skippy, Applegate and Planters. Its products are sold in the United States and in international markets. Founded in 1891 by George A. Hormel in Austin, Minnesota, the company has grown from a local meatpacking business into a diversified food producer.

About Lifeway Foods

Lifeway Foods, Inc. is a U.S. food company specializing in cultured and probiotic dairy products. Its offerings include drinkable kefir, a fermented milk beverage, as well as cultured dairy products such as farmer cheese, sour cream and probiotic shots. Founded in 1986, the company has built its business around kefir and related products, which it sells under the Lifeway brand. Its products are distributed across the United States and are also available in select international markets. Julie Smolyansky has served as Lifeway Foods’ president and chief executive officer since 2002, following the death of her father, co-founder Michael Smolyansky.