MGP Ingredients (NASDAQ:MGPI) vs. Constellation Brands (NYSE:STZ) Critical Review

MGP Ingredients (NASDAQ:MGPI) and Constellation Brands (NYSE:STZ) are both consumer staples companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, earnings, risk and analyst recommendations.

Dividends

MGP Ingredients pays an annual dividend of $0.48 per share and has a dividend yield of 1.9%. Constellation Brands pays an annual dividend of $4.08 per share and has a dividend yield of 2.6%. MGP Ingredients pays out -71.6% of its earnings in the form of a dividend. Constellation Brands pays out 64.4% 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. Constellation Brands has increased its dividend for 5 consecutive years. Constellation Brands is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares MGP Ingredients and Constellation Brands”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MGP Ingredients	$703.62 million	0.77	$34.66 million	($0.67)	-37.82
Constellation Brands	$10.96 billion	2.52	-$81.40 million	$6.34	25.15

MGP Ingredients has higher earnings, but lower revenue than Constellation Brands. MGP Ingredients is trading at a lower price-to-earnings ratio than Constellation Brands, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

77.1% of MGP Ingredients shares are held by institutional investors. Comparatively, 77.3% of Constellation Brands shares are held by institutional investors. 34.4% of MGP Ingredients shares are held by insiders. Comparatively, 12.5% of Constellation Brands 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.

Profitability

This table compares MGP Ingredients and Constellation Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MGP Ingredients	-2.56%	9.65%	5.83%
Constellation Brands	11.08%	29.15%	10.20%

Analyst Ratings

This is a summary of recent recommendations for MGP Ingredients and Constellation Brands, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MGP Ingredients	2	1	4	0	2.29
Constellation Brands	2	9	11	1	2.48

MGP Ingredients presently has a consensus price target of $33.60, indicating a potential upside of 32.60%. Constellation Brands has a consensus price target of $176.91, indicating a potential upside of 10.96%. Given MGP Ingredients’ higher possible upside, equities research analysts plainly believe MGP Ingredients is more favorable than Constellation Brands.

Volatility and Risk

MGP Ingredients has a beta of 0.42, meaning that its share price is 58% less volatile than the S&P 500. Comparatively, Constellation Brands has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500.

Summary

Constellation Brands beats MGP Ingredients on 14 of the 18 factors compared between the two stocks.

About MGP Ingredients

MGP Ingredients, Inc., together with its subsidiaries, engages in the production and supply of distilled spirits, branded spirits, and food ingredients in the United States and internationally. The company operates through three segments: Distillery Solutions; Branded Spirits; and Ingredient Solutions. The Distillery Solutions segment provides food grade alcohol for beverage applications that include bourbon, rye, whiskeys, as well as grain neutral spirits, include vodka and gin; and food-grade industrial alcohol, which is used as an ingredient in food products, personal care products, cleaning solutions, pharmaceuticals, and various other products. This segment also offers distillery co-products, such as dried distillers’ grain, fuel-grade alcohol for blending with gasoline, and corn oil; and provides warehouse services, including barrel put away, barrel storage, and barrel retrieval services, as well as blending services. The Branded Spirits segment provides premium plus, ultra-premium, super premium, premium, mid, and value branded distilled spirits, as well as private label products. The Ingredient Solutions segment provides specialty wheat starches for food applications under the Fibersym, Resistant Starch series, and FiberRite RW Resistant Starch names; specialty wheat proteins for food applications under the Arise and Proterra names; gluten-free textured pea proteins; commodity wheat starch for food and non-food applications; and commodity wheat proteins. It sells its products directly or through distributors to manufacturers and processors of finished packaged goods or to bakeries. The company was founded in 1941 and is based in Atchison, Kansas.

About Constellation Brands

Constellation Brands, Inc., together with its subsidiaries, produces, imports, markets, and sells beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. The company provides beer primarily under the Corona Extra, Corona Familiar, Corona Hard Seltzer, Corona Light, Corona Non-Alcoholic, Corona Premier, Corona Refresca, Modelo Especial, Modelo Chelada, Modelo Negra, Modelo Oro, Victoria, Vicky Chamoy, and Pacifico brands. It also offers wine under the Cook’s California Champagne, Kim Crawford, Meiomi, Mount Veeder, Ruffino, SIMI, My Favorite Neighbor, Robert Mondavi Winery, Schrader, and The Prisoner Wine Company brands; and spirits under the Casa Noble, Copper & Kings, High West, Mi CAMPO, Nelson’s Green Brier, and SVEDKA brands. The company provides its products to wholesale distributors, retailers, on-premise locations, and state alcohol beverage control agencies. Constellation Brands, Inc. was founded in 1945 and is headquartered in Victor, New York.