Contrasting Kraft Heinz (NASDAQ:KHC) & Flowers Foods (NYSE:FLO)

Kraft Heinz (NASDAQ:KHC) and Flowers Foods (NYSE:FLO) are both consumer staples companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

78.2% of Kraft Heinz shares are held by institutional investors. Comparatively, 75.5% of Flowers Foods shares are held by institutional investors. 0.4% of Kraft Heinz shares are held by company insiders. Comparatively, 11.6% of Flowers Foods shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Kraft Heinz has a beta of 0.07, indicating that its share price is 93% less volatile than the S&P 500. Comparatively, Flowers Foods has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500.

Profitability

This table compares Kraft Heinz and Flowers Foods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kraft Heinz	-23.44%	7.07%	3.68%
Flowers Foods	1.59%	16.61%	5.38%

Valuation & Earnings

This table compares Kraft Heinz and Flowers Foods”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kraft Heinz	$24.94 billion	1.05	-$5.85 billion	($4.94)	-4.48
Flowers Foods	$5.26 billion	0.33	$83.82 million	$0.40	20.68

Flowers Foods has lower revenue, but higher earnings than Kraft Heinz. Kraft Heinz is trading at a lower price-to-earnings ratio than Flowers Foods, indicating that it is currently the more affordable of the two stocks.

Dividends

Kraft Heinz pays an annual dividend of $1.60 per share and has a dividend yield of 7.2%. Flowers Foods pays an annual dividend of $0.99 per share and has a dividend yield of 12.0%. Kraft Heinz pays out -32.4% of its earnings in the form of a dividend. Flowers Foods pays out 247.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Flowers Foods has increased its dividend for 24 consecutive years. Flowers Foods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and target prices for Kraft Heinz and Flowers Foods, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kraft Heinz	5	15	0	1	1.86
Flowers Foods	3	4	0	0	1.57

Kraft Heinz currently has a consensus price target of $23.53, indicating a potential upside of 6.42%. Flowers Foods has a consensus price target of $11.17, indicating a potential upside of 35.03%. Given Flowers Foods’ higher possible upside, analysts plainly believe Flowers Foods is more favorable than Kraft Heinz.

Summary

Flowers Foods beats Kraft Heinz on 11 of the 17 factors compared between the two stocks.

About Kraft Heinz

The Kraft Heinz Company, together with its subsidiaries, manufactures and markets food and beverage products in North America and internationally. Its products include condiments and sauces, cheese and dairy products, meals, meats, refreshment beverages, coffee, and other grocery products under the Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Ore-Ida, Maxwell House, Kool-Aid, Jell-O, Heinz, ABC, Master, Quero, Kraft, Golden Circle, Wattie's, Pudliszki, and Plasmon brands. It sells its products through its own sales organizations, as well as through independent brokers, agents, and distributors to chain, wholesale, cooperative, and independent grocery accounts; convenience, value, and club stores; pharmacies and drug stores; mass merchants; foodservice distributors; institutions, including hotels, restaurants, bakeries, hospitals, health care facilities, and government agencies; and online through various e-commerce platforms and retailers. The company was formerly known as H.J. Heinz Holding Corporation and changed its name to The Kraft Heinz Company in July 2015. The Kraft Heinz Company was founded in 1869 and is based in Pittsburgh, Pennsylvania.

About Flowers Foods

Flowers Foods, Inc. produces and markets packaged bakery food products in the United States. Its principal products include fresh breads, buns, rolls, snack items, bagels, English muffins, and tortillas, as well as frozen breads and rolls under the Nature's Own, Dave's Killer Bread, Wonder, Canyon Bakehouse, Mrs. Freshley's, and Tastykake brand names. The company distributes its products through a direct-store-delivery distribution and a warehouse delivery system, as well as operates bakeries. Its customers include national and regional restaurants, institutions and foodservice distributors, and retail in-store bakeries; wholesale distributors; mass merchandisers, supermarkets, vending outlets, and convenience stores; quick-serve chains, food wholesalers, institutions, dollar stores, and vending companies; and public health care, military commissaries, and prisons, and other governmental institutions. The company was formerly known as Flowers Industries and changed its name to Flowers Foods, Inc. in 2001. Flowers Foods, Inc. was founded in 1919 and is headquartered in Thomasville, Georgia.