Analyzing Nomad Foods (NYSE:NOMD) and Marzetti (NASDAQ:MZTI)

Nomad Foods (NYSE:NOMD) and Marzetti (NASDAQ:MZTI) are both consumer staples companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, profitability and institutional ownership.

Dividends

Nomad Foods pays an annual dividend of $0.68 per share and has a dividend yield of 6.8%. Marzetti pays an annual dividend of $4.00 per share and has a dividend yield of 3.8%. Nomad Foods pays out 66.0% of its earnings in the form of a dividend. Marzetti pays out 62.6% 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. Nomad Foods has raised its dividend for 2 consecutive years and Marzetti has raised its dividend for 62 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations for Nomad Foods and Marzetti, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nomad Foods	1	2	3	0	2.33
Marzetti	1	2	1	0	2.00

Nomad Foods presently has a consensus price target of $12.50, indicating a potential upside of 24.40%. Marzetti has a consensus price target of $169.33, indicating a potential upside of 60.33%. Given Marzetti’s higher probable upside, analysts plainly believe Marzetti is more favorable than Nomad Foods.

Institutional & Insider Ownership

75.3% of Nomad Foods shares are owned by institutional investors. Comparatively, 66.4% of Marzetti shares are owned by institutional investors. 29.1% of Marzetti shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Nomad Foods and Marzetti’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nomad Foods	4.43%	9.05%	3.61%
Marzetti	9.06%	18.12%	14.01%

Risk and Volatility

Nomad Foods has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, Marzetti has a beta of 0.33, suggesting that its share price is 67% less volatile than the S&P 500.

Earnings and Valuation

This table compares Nomad Foods and Marzetti”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nomad Foods	$2.99 billion	0.47	$154.66 million	$1.03	9.76
Marzetti	$1.94 billion	1.49	$167.35 million	$6.39	16.53

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

Summary

Marzetti beats Nomad Foods on 11 of the 17 factors compared between the two stocks.

About Nomad Foods

Nomad Foods Limited, together with its subsidiaries, manufactures, markets, and distributes a range of frozen food products in the United Kingdom and internationally. The company offers frozen fish products, including fish fingers, coated fish, and natural fish; ready-to-cook vegetable products, such as peas and spinach; and frozen poultry and meat products comprising nuggets, grills, and burgers. It also provides meal products that include ready-to-cook noodles, pasta, lasagna, pancakes, and other ready-made meals; ice creams, such as in-home and out-of-home ice creams; and other products consisting of soups, pizzas, bakery goods, and meat substitutes. The company sells its products to supermarkets and food retail chains primarily under the Birds Eye, Green Cuisine, iglo, Findus, Aunt Bessie's, Goodfella's, Frikom, Ledo, La Cocinera, and Belviva brand names. Nomad Foods Limited was founded in 2014 and is headquartered in Feltham, the United Kingdom.

About Marzetti

Lancaster Colony Corporation engages in the manufacturing and marketing of specialty food products for the retail and foodservice channels in the United States. It operates in two segments, Retail and Foodservice. The company offers frozen garlic bread under the New York BRAND Bakery; frozen Parkerhouse style yeast and dinner rolls under the Sister Schubert's brand; salad dressings under the Marzetti, Simply Dressed, Cardini's, and Girard's brands; vegetable and fruit dips under the Marzetti brand; croutons and salad toppings under the New York BRAND Bakery, Chatham Village, and Marzetti brands; and frozen pasta under the Marzetti Frozen Pasta brand. It also manufactures and sells other products to brand license agreements, including Olive Garden dressings, Buffalo Wild Wings sauces, and Chick-fil-A sauces. The company sells its products through sales personnel, food brokers, and distributors to retailers and restaurants. Lancaster Colony Corporation was incorporated in 1961 and is based in Westerville, Ohio.