General Mills (NYSE: GIS) and Hershey (NYSE:HSY) are both large-cap non-cyclical consumer goods & services companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, valuation and dividends.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for General Mills and Hershey, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
General Mills 3 14 1 0 1.89
Hershey 1 7 4 0 2.25

General Mills currently has a consensus price target of $56.27, suggesting a potential upside of 4.88%. Hershey has a consensus price target of $114.25, suggesting a potential upside of 6.33%. Given Hershey’s stronger consensus rating and higher possible upside, analysts clearly believe Hershey is more favorable than General Mills.

Profitability

This table compares General Mills and Hershey’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
General Mills 10.68% 39.82% 8.16%
Hershey 9.52% 124.06% 19.16%

Dividends

General Mills pays an annual dividend of $1.96 per share and has a dividend yield of 3.7%. Hershey pays an annual dividend of $2.62 per share and has a dividend yield of 2.4%. General Mills pays out 70.3% of its earnings in the form of a dividend. Hershey pays out 78.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. General Mills has raised its dividend for 13 consecutive years and Hershey has raised its dividend for 7 consecutive years. General Mills is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

General Mills has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, Hershey has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500.

Valuation and Earnings

This table compares General Mills and Hershey’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
General Mills $15.62 billion 1.95 $1.66 billion $2.79 19.23
Hershey $7.44 billion 3.04 $720.04 million $3.36 31.98

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

Insider & Institutional Ownership

71.3% of General Mills shares are owned by institutional investors. Comparatively, 49.2% of Hershey shares are owned by institutional investors. 1.4% of General Mills shares are owned by insiders. Comparatively, 0.9% of Hershey shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

General Mills beats Hershey on 9 of the 17 factors compared between the two stocks.

General Mills Company Profile

General Mills, Inc. is a manufacturer and marketer of branded consumer foods sold through retail stores. The Company is a supplier of branded and unbranded food products to the North American foodservice and commercial baking industries. The Company has three segments: U.S. Retail, International, and Convenience Stores and Foodservice. Its products are marketed under various brands, which include Annie’s and Betty Crocker. The Company’s U.S. Retail segment reflects business with a range of grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains, and e-commerce grocery providers operating throughout the United States. The International segment consists of retail and foodservice businesses outside of the United States. The Convenience Stores and Foodservice segment’s product categories include ready-to-eat cereals, snacks, refrigerated yogurt, frozen meals, unbaked and fully baked frozen dough products, and baking mixes.

Hershey Company Profile

The Hershey Company is a producer of chocolate in North America. The Company’s principal product offerings include chocolate and non-chocolate confectionery products; gum and mint refreshment products; pantry items, such as baking ingredients and beverages, and snack items, such as spreads, meat snacks, bars and snack bites and mixes. Its segments include North America, and International and Other. The North America segment includes its chocolate and non-chocolate confectionery business, as well as its grocery and snacks business. This includes developing and growing its business in chocolate and non-chocolate confectionery, pantry, food service and other snacking product lines. The Company distributes and sells confectionery products in export markets of Asia, Latin America, the Middle East, Europe, Africa and other regions. As of December 31, 2016, the Company marketed, sold and distributed its products under more than 80 brand names in approximately 70 countries across the world.

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