Darling Ingredients (NYSE:DAR) versus Lifeway Foods (NASDAQ:LWAY) Critical Analysis

Lifeway Foods (NASDAQ:LWAY) and Darling Ingredients (NYSE:DAR) are both consumer staples companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, valuation, risk, earnings and profitability.

Institutional & Insider Ownership

36.4% of Lifeway Foods shares are owned by institutional investors. Comparatively, 94.4% of Darling Ingredients shares are owned by institutional investors. 18.6% of Lifeway Foods shares are owned by insiders. Comparatively, 1.9% of Darling Ingredients shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Lifeway Foods and Darling Ingredients, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lifeway Foods	0	0	3	0	3.00
Darling Ingredients	0	3	10	0	2.77

Lifeway Foods presently has a consensus target price of $34.33, indicating a potential upside of 16.86%. Darling Ingredients has a consensus target price of $69.00, indicating a potential upside of 19.25%. Given Darling Ingredients’ higher possible upside, analysts clearly believe Darling Ingredients is more favorable than Lifeway Foods.

Earnings and Valuation

This table compares Lifeway Foods and Darling Ingredients”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lifeway Foods	$212.50 million	2.11	$13.86 million	$0.97	30.29
Darling Ingredients	$6.14 billion	1.50	$62.80 million	$3.71	15.60

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

Profitability

This table compares Lifeway Foods and Darling Ingredients’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lifeway Foods	6.54%	17.76%	13.82%
Darling Ingredients	9.13%	13.23%	6.83%

Risk & Volatility

Lifeway Foods has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500. Comparatively, Darling Ingredients has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.

Summary

Darling Ingredients beats Lifeway Foods on 8 of the 14 factors compared between the two stocks.

About Lifeway Foods

Lifeway Foods, Inc. produces and markets probiotic-based products in the United States and internationally. Its primary product is drinkable kefir, a cultured dairy product in various organic and non-organic sizes, flavors, and types. The company offers European-style soft cheeses; cream and other products; ProBugs, a line of kefir products designed for children; drinkable yogurt; and fresh made butter and sour cream. It sells its products under the Lifeway, GlenOaks Farms, and Fresh Made brand names, as well as under private labels on behalf of customers primarily through direct sales force, brokers, and distributors. Lifeway Foods, Inc. was incorporated in 1986 and is based in Morton Grove, Illinois.

About Darling Ingredients

Darling Ingredients Inc. develops, produces, and sells natural ingredients from edible and inedible bio-nutrients in North America, Europe, China, South America, and internationally. The company operates through three segments: Feed Ingredients, Food Ingredients, and Fuel Ingredients. It offers ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy, and fertilizer industries. The company also collects and transforms various animal by-product streams into useable and specialty ingredients, such as collagen, edible fats, feed-grade fats, animal proteins and meals, plasma, pet food ingredients, organic fertilizers, yellow grease, fuel feedstock, green energy, natural casings, and hides. In addition, it recovers and converts used cooking oil and animal fats, and residual bakery products into valuable feed and fuel ingredients. Further, the company provides environmental services, including grease trap collection and disposal services to food service establishments. It primarily operates under the Rendac, Sonac, FASA, Ecoson, Rousselot, Gelnex, and CTH brand names. The company was formerly known as Darling International Inc. and changed its name to Darling Ingredients Inc. in May 2014. Darling Ingredients Inc. was founded in 1882 and is headquartered in Irving, Texas.