Financial Survey: Smithfield Foods (NASDAQ:SFD) and Lifeway Foods (NASDAQ:LWAY)

Smithfield Foods (NASDAQ:SFD) and Lifeway Foods (NASDAQ:LWAY) are both consumer staples companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, dividends, valuation, risk, earnings and institutional ownership.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Smithfield Foods and Lifeway Foods, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smithfield Foods	1	3	3	0	2.29
Lifeway Foods	0	1	2	1	3.00

Smithfield Foods currently has a consensus target price of $26.00, suggesting a potential upside of 41.84%. Lifeway Foods has a consensus target price of $34.00, suggesting a potential upside of 46.43%. Given Lifeway Foods’ stronger consensus rating and higher possible upside, analysts plainly believe Lifeway Foods is more favorable than Smithfield Foods.

Valuation and Earnings

This table compares Smithfield Foods and Lifeway Foods”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Smithfield Foods	$15.47 billion	0.47	$1.06 billion	$2.68	6.84
Lifeway Foods	$242.41 million	1.45	$10.57 million	$0.70	33.17

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

Dividends

Smithfield Foods pays an annual dividend of $1.25 per share and has a dividend yield of 6.8%. Lifeway Foods pays an annual dividend of $0.08 per share and has a dividend yield of 0.3%. Smithfield Foods pays out 46.6% of its earnings in the form of a dividend. Lifeway Foods pays out 11.4% 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Smithfield Foods	N/A	N/A	N/A
Lifeway Foods	N/A	N/A	N/A

Volatility & Risk

Smithfield Foods has a beta of -0.41, indicating that its share price is 141% less volatile than the S&P 500. Comparatively, Lifeway Foods has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500.

Insider & Institutional Ownership

36.4% of Lifeway Foods shares are owned by institutional investors. 1.8% of Smithfield Foods shares are owned by insiders. Comparatively, 18.6% of Lifeway Foods shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Lifeway Foods beats Smithfield Foods on 9 of the 14 factors compared between the two stocks.

About Smithfield Foods

Smithfield Foods, Inc. produces and markets a variety of fresh meat and packaged meats products both domestically and internationally. The Company operates in four segments: Pork, Hog Production, International and Corporate, each of which consists of a number of subsidiaries, joint ventures and other investments. The Pork segment consists mainly of its three wholly owned United States fresh pork and packaged meats subsidiaries: The Smithfield Packing Company, Inc. (Smithfield Packing), Farmland Foods, Inc. (Farmland Foods) and John Morrell Food Group (John Morrell). The Hog Production segment consists of the Company’s hog production operations located in the United States. On September 2012 (fiscal 2013), the Company acquired a 70% controlling interest in American Skin Food Group, LLC. Effective September 26, 2013, Shuanghui International Holdings Ltd merged with Smithfield Foods Inc, a producer and wholesaler of pork meat products.

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.