Critical Analysis: Local Bounti (NYSE:LOCL) and Archer Daniels Midland (NYSE:ADM)

Local Bounti (NYSE:LOCL) and Archer Daniels Midland (NYSE:ADM) are both consumer staples companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, profitability, valuation, institutional ownership and risk.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Local Bounti and Archer Daniels Midland, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Local Bounti	1	0	0	0	1.00
Archer Daniels Midland	1	5	1	1	2.25

Archer Daniels Midland has a consensus target price of $79.67, indicating a potential upside of 0.72%. Given Archer Daniels Midland’s stronger consensus rating and higher possible upside, analysts plainly believe Archer Daniels Midland is more favorable than Local Bounti.

Earnings & Valuation

This table compares Local Bounti and Archer Daniels Midland”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Local Bounti	$48.37 million	0.48	-$94.38 million	($2.77)	-0.36
Archer Daniels Midland	$80.27 billion	0.47	$1.08 billion	$3.65	21.67

Archer Daniels Midland has higher revenue and earnings than Local Bounti. Local Bounti is trading at a lower price-to-earnings ratio than Archer Daniels Midland, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

28.0% of Local Bounti shares are held by institutional investors. Comparatively, 78.3% of Archer Daniels Midland shares are held by institutional investors. 21.0% of Local Bounti shares are held by insiders. Comparatively, 0.6% of Archer Daniels Midland shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Local Bounti has a beta of 2.72, suggesting that its share price is 172% more volatile than the S&P 500. Comparatively, Archer Daniels Midland has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500.

Profitability

This table compares Local Bounti and Archer Daniels Midland’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Local Bounti	-130.52%	N/A	-16.45%
Archer Daniels Midland	2.16%	9.21%	3.95%

Summary

Archer Daniels Midland beats Local Bounti on 12 of the 15 factors compared between the two stocks.

About Local Bounti

Local Bounti Corporation grows and packs fresh greens in the United States. It produces lettuce, herbs, and loose-leaf lettuce. The company sells its products to food retailers and food service distributors. Local Bounti Corporation was founded in 2018 and is headquartered in Hamilton, Montana.

About Archer Daniels Midland

Archer-Daniels-Midland Company engages in the procurement, transportation, storage, processing, and merchandising of agricultural commodities, ingredients, flavors, and solutions in the United States, Switzerland, the Cayman Islands, Brazil, Mexico, Canada, the United Kingdom, and internationally. It operates in three segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. The company originates, merchandises, stores, and transports agricultural raw materials, such as oilseeds and soft seeds. It also engages in the agricultural commodity and feed product import, export, and distribution; and various structured trade finance activities. In addition, the company offers soybean meal and oil; vegetable and salad oils and protein meals; ingredients for the food, feed, energy, and industrial customers; margarine, shortening, and other food products; and partially refined oils to produce biodiesel and glycols for use in chemicals, paints, and other industrial products. Further, it provides peanuts, peanut-derived ingredients, and cotton cellulose pulp; sweeteners, corn and wheat starches, syrup, glucose, wheat flour, and dextrose; alcohol, and other food and animal feed ingredients; ethyl alcohol and ethanol; corn gluten feed and meal; distillers' grains; corn germ; and citric acids. Additionally, the company provides proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, postbiotics, enzymes, and botanical extracts; and other specialty food and feed ingredients; edible beans; formula feeds, and animal health and nutrition products; and contract and private label pet treats and food products. It also offers futures commission merchant; commodity brokerage services; cash margins and securities pledged to commodity exchange clearinghouse; and cash pledged as security under certain insurance arrangements. The company was founded in 1902 and is headquartered in Chicago, Illinois.