General Mills (GIS) versus The Kraft Heinz Company (KHC) Financial Contrast

General Mills (NYSE: GIS) and The Kraft Heinz Company (NASDAQ:KHC) are both large-cap consumer staples companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, profitabiliy, dividends, risk and analyst recommendations.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for General Mills and The Kraft Heinz Company, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
General Mills 4 11 2 0 1.88
The Kraft Heinz Company 0 4 10 1 2.80

General Mills presently has a consensus price target of $62.14, indicating a potential upside of 10.63%. The Kraft Heinz Company has a consensus price target of $98.67, indicating a potential upside of 10.94%. Given The Kraft Heinz Company’s stronger consensus rating and higher probable upside, analysts plainly believe The Kraft Heinz Company is more favorable than General Mills.

Valuation and Earnings

This table compares General Mills and The Kraft Heinz Company’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
General Mills $15.74 billion 2.06 $3.41 billion $2.70 20.80
The Kraft Heinz Company $26.28 billion 4.12 $8.40 billion $2.82 31.54

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

Dividends

General Mills pays an annual dividend of $1.92 per share and has a dividend yield of 3.4%. The Kraft Heinz Company pays an annual dividend of $2.40 per share and has a dividend yield of 2.7%. General Mills pays out 71.1% of its earnings in the form of a dividend. The Kraft Heinz Company pays out 85.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. The Kraft Heinz Company has raised its dividend for 13 consecutive years. General Mills is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

70.5% of General Mills shares are held by institutional investors. Comparatively, 62.6% of The Kraft Heinz Company shares are held by institutional investors. 1.3% of General Mills shares are held by insiders. Comparatively, 26.9% of The Kraft Heinz Company shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility and Risk

General Mills has a beta of 0.6, meaning that its stock price is 40% less volatile than the S&P 500. Comparatively, The Kraft Heinz Company has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500.

Profitability

This table compares General Mills and The Kraft Heinz Company’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
General Mills 10.34% 37.15% 8.35%
The Kraft Heinz Company 13.12% 7.25% 3.47%

Summary

The Kraft Heinz Company beats General Mills on 12 of the 18 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.

The Kraft Heinz Company Company Profile

The Kraft Heinz Company is a food and beverage company. The Company is engaged in the manufacturing and marketing of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. The Company’s segments include the United States, Canada and Europe. The Company’s remaining businesses are combined as Rest of World. The Rest of World consists of Latin America and Asia, Middle East and Africa (AMEA). The Company provides products for various occasions whether at home, in restaurants or on the go. The Company’s brands include Heinz, Kraft, Oscar Mayer, Philadelphia, Planters, Velveeta, Lunchables, Maxwell House, Capri Sun, and Ore-Ida. The Company’s products are sold through its own sales organizations and through independent brokers, agents and distributors to chain, wholesale, cooperative and independent grocery accounts, convenience stores, drug stores, value stores, bakeries and pharmacies.

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