Analyzing Medifast (NYSE:MED) and Freshpet (NASDAQ:FRPT)

Medifast (NYSE:MED) and Freshpet (NASDAQ:FRPT) are both consumer staples companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, earnings, risk and profitability.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Medifast and Freshpet, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Medifast	0	1	0	0	2.00
Freshpet	1	6	8	0	2.47

Medifast presently has a consensus price target of $16.50, suggesting a potential upside of 18.03%. Freshpet has a consensus price target of $108.07, suggesting a potential upside of 97.14%. Given Freshpet’s stronger consensus rating and higher possible upside, analysts clearly believe Freshpet is more favorable than Medifast.

Insider & Institutional Ownership

95.5% of Medifast shares are held by institutional investors. 2.9% of Medifast shares are held by insiders. Comparatively, 4.4% of Freshpet shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Medifast has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, Freshpet has a beta of 1.72, suggesting that its stock price is 72% more volatile than the S&P 500.

Earnings & Valuation

This table compares Medifast and Freshpet”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Medifast	$602.46 million	0.26	$2.09 million	$0.32	43.68
Freshpet	$975.18 million	2.74	$46.92 million	$0.67	81.82

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

Profitability

This table compares Medifast and Freshpet’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Medifast	0.76%	2.00%	1.50%
Freshpet	3.23%	4.82%	3.21%

Summary

Freshpet beats Medifast on 13 of the 14 factors compared between the two stocks.

About Medifast

Medifast, Inc., through its subsidiaries, engages in the manufacture and sale of weight loss, weight management, and healthy living products in the United States and the Asia-Pacific. It offers bars, puffs, cereal, crunchers, drinks, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups under the OPTAVIA, OPTAVIA ACTIVE, and Optimal Health brand names. The company markets its products through point-of-sale transactions, as well as through ecommerce platform. Medifast, Inc. was founded in 1980 and is headquartered in Baltimore, Maryland.

About Freshpet

Freshpet, Inc., together with its subsidiaries, manufactures, distributes, and markets natural fresh meals and treats for dogs and cats in the United States, Canada, and Europe. It sells dog food, cat food, and dog treats under the Freshpet brand name; and Dognation and Dog Joy labels through various classes of retail, including grocery, mass, club, pet specialty, and natural, as well as online. The company was incorporated in 2004 and is headquartered in Secaucus, New Jersey.