Contrasting Universal (NYSE:UVV) & Imperial Tobacco Group (OTCMKTS:IMBBY)

Imperial Tobacco Group (OTCMKTS:IMBBY) and Universal (NYSE:UVV) are both consumer staples companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, earnings, risk, profitability, analyst recommendations, institutional ownership and dividends.

Institutional & Insider Ownership

0.0% of Imperial Tobacco Group shares are held by institutional investors. Comparatively, 81.0% of Universal shares are held by institutional investors. 1.0% of Imperial Tobacco Group shares are held by insiders. Comparatively, 1.9% of Universal shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Imperial Tobacco Group and Universal, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Imperial Tobacco Group	0	1	1	1	3.00
Universal	0	0	0	0	0.00

Profitability

This table compares Imperial Tobacco Group and Universal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Imperial Tobacco Group	N/A	N/A	N/A
Universal	3.22%	7.89%	3.84%

Risk and Volatility

Imperial Tobacco Group has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500. Comparatively, Universal has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.

Earnings and Valuation

This table compares Imperial Tobacco Group and Universal”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Imperial Tobacco Group	$41.10 billion	0.77	$3.31 billion	N/A	N/A
Universal	$2.95 billion	0.46	$95.05 million	$3.78	14.42

Imperial Tobacco Group has higher revenue and earnings than Universal.

Dividends

Imperial Tobacco Group pays an annual dividend of $2.15 per share and has a dividend yield of 5.6%. Universal pays an annual dividend of $3.28 per share and has a dividend yield of 6.0%. Universal pays out 86.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Universal has increased its dividend for 56 consecutive years. Universal is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Universal beats Imperial Tobacco Group on 8 of the 15 factors compared between the two stocks.

About Imperial Tobacco Group

Imperial Brands PLC, together with its subsidiaries, manufactures, imports, markets, and sells tobacco and tobacco-related products in Europe, the Americas, Africa, Asia, and Australasia. It offers a range of cigarettes, tobacco accessories, vapour, heated tobacco, and oral nicotine. The company sells its products under various brands, including JPS, Davidoff, Gauloises, West, Winston, Kool, Lambert & Butler, Fortuna, Nobel, News, Backwoods, Champion, Golden Virginia, Rizla, Blu, Pulze, Skruf, and Zone X. In addition, it engages in the distribution of tobacco and NGP products for tobacco and NGP product manufacturers; and various non-tobacco and NGP products and services. Further, the company is involved in the management of a golf course; distribution of pharmaceuticals, POS software, and published materials and other products; printing and publishing activities; and provision of long haul transportation, industrial parcel and express delivery, pharmaceutical products logistics, advertising, payment, and support management services, as well as owns the trademarks; and retails its products. Additionally, it engages in distribution of books; waste management, leaf processing related activities. Furthermore, the company is involved in research and development of e-vapour products. The company was formerly known as Imperial Tobacco Group PLC and changed its name to Imperial Brands PLC in February 2016. Imperial Brands PLC was founded in 1636 and is based in Bristol, the United Kingdom.

About Universal

Universal Corporation processes and supplies leaf tobacco and plant-based ingredients worldwide. The company operates through two segments, Tobacco Operations; and Ingredients Operations. It is involved in the procuring, financing, processing, packing, storing, and shipping leaf tobacco for sale to manufacturers of consumer tobacco products. The company contracts, purchases, processes, and sells flue-cured, burley, and oriental tobaccos that are primarily used in the manufacture of cigarettes; and dark air-cured tobaccos principally used in the manufacture of cigars, natural wrapped cigars and cigarillos, smokeless, and pipe tobacco products. It also provides value-added services, including blending, chemical, and physical testing of tobacco; service cutting for various manufacturers; manufacturing reconstituted leaf tobacco; just-in-time inventory management services; electronic nicotine delivery systems; and smoke testing services for customers. In addition, the company offers testing services for crop protection agents and tobacco constituents in seed, leaf, and finished products, including e-cigarette liquids and vapors; and analytical services that include chemical compound testing in finished tobacco products and mainstream smoke. Further, it provides a various value-added manufacturing processes to produce specialty vegetable and fruit-based ingredients, as well as botanical extracts and flavorings for human and pet food markets; and recycles waste materials from tobacco production. Universal Corporation was founded in 1886 and is headquartered in Richmond, Virginia.