Comparing Flowers Foods (NYSE:FLO) & Medifast (NYSE:MED)

Medifast (NYSE:MED) and Flowers Foods (NYSE:FLO) are both small-cap consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, profitability and earnings.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Medifast	$385.79 million	0.29	-$18.67 million	($1.71)	-5.88
Flowers Foods	$5.26 billion	0.36	$83.82 million	$0.40	22.24

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

Dividends

Medifast pays an annual dividend of $6.60 per share and has a dividend yield of 65.6%. Flowers Foods pays an annual dividend of $0.99 per share and has a dividend yield of 11.1%. Medifast pays out -386.0% of its earnings in the form of a dividend. Flowers Foods pays out 247.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Flowers Foods has increased its dividend for 24 consecutive years. Medifast is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Medifast has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500. Comparatively, Flowers Foods has a beta of 0.36, indicating that its stock price is 64% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Medifast and Flowers Foods, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Medifast	1	1	0	0	1.50
Flowers Foods	2	4	0	0	1.67

Medifast presently has a consensus price target of $12.00, suggesting a potential upside of 19.31%. Flowers Foods has a consensus price target of $12.60, suggesting a potential upside of 41.65%. Given Flowers Foods’ stronger consensus rating and higher possible upside, analysts clearly believe Flowers Foods is more favorable than Medifast.

Insider and Institutional Ownership

95.5% of Medifast shares are held by institutional investors. Comparatively, 75.4% of Flowers Foods shares are held by institutional investors. 2.9% of Medifast shares are held by company insiders. Comparatively, 11.6% of Flowers Foods shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Medifast and Flowers Foods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Medifast	-4.84%	-4.27%	-3.37%
Flowers Foods	1.59%	16.61%	5.38%

Summary

Flowers Foods beats Medifast on 12 of the 16 factors compared between the two stocks.

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.

About Flowers Foods

Flowers Foods, Inc. produces and markets packaged bakery food products in the United States. Its principal products include fresh breads, buns, rolls, snack items, bagels, English muffins, and tortillas, as well as frozen breads and rolls under the Nature's Own, Dave's Killer Bread, Wonder, Canyon Bakehouse, Mrs. Freshley's, and Tastykake brand names. The company distributes its products through a direct-store-delivery distribution and a warehouse delivery system, as well as operates bakeries. Its customers include national and regional restaurants, institutions and foodservice distributors, and retail in-store bakeries; wholesale distributors; mass merchandisers, supermarkets, vending outlets, and convenience stores; quick-serve chains, food wholesalers, institutions, dollar stores, and vending companies; and public health care, military commissaries, and prisons, and other governmental institutions. The company was formerly known as Flowers Industries and changed its name to Flowers Foods, Inc. in 2001. Flowers Foods, Inc. was founded in 1919 and is headquartered in Thomasville, Georgia.