Critical Survey: Hormel Foods Corporation (HRL) & Industrias Bachoco, S.A. de C.V. (IBA)
Hormel Foods Corporation (NYSE: HRL) and Industrias Bachoco, S.A. de C.V. (NYSE:IBA) are both mid-cap consumer staples companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.
This table compares Hormel Foods Corporation and Industrias Bachoco, S.A. de C.V.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Hormel Foods Corporation||9.38%||18.90%||13.62%|
|Industrias Bachoco, S.A. de C.V.||7.54%||12.91%||9.16%|
Hormel Foods Corporation pays an annual dividend of $0.68 per share and has a dividend yield of 2.2%. Industrias Bachoco, S.A. de C.V. pays an annual dividend of $0.82 per share and has a dividend yield of 1.3%. Hormel Foods Corporation pays out 42.0% of its earnings in the form of a dividend. Industrias Bachoco, S.A. de C.V. pays out 18.7% 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. Hormel Foods Corporation has increased its dividend for 50 consecutive years. Hormel Foods Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Hormel Foods Corporation has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500. Comparatively, Industrias Bachoco, S.A. de C.V. has a beta of 0.37, meaning that its stock price is 63% less volatile than the S&P 500.
This is a summary of recent recommendations for Hormel Foods Corporation and Industrias Bachoco, S.A. de C.V., as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Hormel Foods Corporation||0||5||5||0||2.50|
|Industrias Bachoco, S.A. de C.V.||0||0||0||0||N/A|
Hormel Foods Corporation presently has a consensus price target of $38.00, indicating a potential upside of 22.90%. Given Hormel Foods Corporation’s higher probable upside, equities analysts clearly believe Hormel Foods Corporation is more favorable than Industrias Bachoco, S.A. de C.V..
Earnings and Valuation
This table compares Hormel Foods Corporation and Industrias Bachoco, S.A. de C.V.’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Hormel Foods Corporation||$9.30 billion||1.76||$1.41 billion||$1.62||19.09|
|Industrias Bachoco, S.A. de C.V.||$3.11 billion||1.02||$447.42 million||$4.38||14.49|
Hormel Foods Corporation has higher revenue and earnings than Industrias Bachoco, S.A. de C.V.. Industrias Bachoco, S.A. de C.V. is trading at a lower price-to-earnings ratio than Hormel Foods Corporation, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
38.9% of Hormel Foods Corporation shares are owned by institutional investors. Comparatively, 3.8% of Industrias Bachoco, S.A. de C.V. shares are owned by institutional investors. 3.5% of Hormel Foods Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Hormel Foods Corporation beats Industrias Bachoco, S.A. de C.V. on 14 of the 16 factors compared between the two stocks.
About Hormel Foods Corporation
Hormel Foods Corporation is engaged in the production of a range of meat and food products. The Company operates through five segments: Grocery Products, which is engaged in the processing, marketing and sale of shelf-stable food products sold for the retail market; Refrigerated Foods, which consists of the processing, marketing and sale of branded and unbranded pork, beef, chicken and turkey products for retail, foodservice and fresh product customers; Jennie-O Turkey Store (JOTS), which consists of the processing, marketing and sale of branded and unbranded turkey products for retail, foodservice and fresh product customers; Specialty Foods, which consists of the packaging and sale of nutritional and private label shelf-stable products to industrial, retail and foodservice customers, and International & Other, which includes Hormel Foods International Corporation, which manufactures, markets and sells the Company products internationally.
About Industrias Bachoco, S.A. de C.V.
Industrias Bachoco, S.A.B. de C.V. (Bachoco) is a holding company. The Company owns and manages over 1,000 facilities, organized in approximately 10 production complexes and over 60 distribution centers in Mexico, and a production complex in the United States. Bachoco operates through two segments: poultry and others. The poultry segment consists of chicken and egg operations. The others segment includes the operations of pigs, balanced feed for animal consumption and other by-products. The Company participates in the food industry in Mexico and in the United States, mainly in the poultry industry. In Mexico, the Company’s core business is poultry (chicken and egg products). It also produces and sells a range of other products, which it refers to as other business lines, which include the production and selling of balanced feed, live swine, beef and turkey products, as well as a laboratory that produces vaccines for the poultry industry and other similar industries.
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