Analyzing US Foods (NYSE:USFD) and Freshpet (NASDAQ:FRPT)

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

Profitability

This table compares Freshpet and US Foods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Freshpet	12.63%	6.93%	4.64%
US Foods	1.71%	18.74%	6.09%

Risk and Volatility

Freshpet has a beta of 1.66, indicating that its share price is 66% more volatile than the S&P 500. Comparatively, US Foods has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500.

Insider and Institutional Ownership

98.8% of US Foods shares are held by institutional investors. 4.4% of Freshpet shares are held by insiders. Comparatively, 0.6% of US Foods shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations for Freshpet and US Foods, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freshpet	1	8	9	0	2.44
US Foods	0	2	10	1	2.92

Freshpet currently has a consensus target price of $76.88, suggesting a potential upside of 30.45%. US Foods has a consensus target price of $107.33, suggesting a potential upside of 17.72%. Given Freshpet’s higher possible upside, research analysts plainly believe Freshpet is more favorable than US Foods.

Earnings and Valuation

This table compares Freshpet and US Foods”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Freshpet	$1.10 billion	2.62	$139.14 million	$2.57	22.93
US Foods	$39.42 billion	0.51	$676.00 million	$2.94	31.01

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

Summary

US Foods beats Freshpet on 10 of the 15 factors compared between the two stocks.

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.

About US Foods

US Foods Holding Corp., together with its subsidiaries, engages in marketing, sale, and distribution of fresh, frozen, and dry food and non-food products to foodservice customers in the United States. The company's customers include independently owned single and multi-unit restaurants, regional concepts, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities, and retail locations. The company was formerly known as USF Holding Corp. and changed its name to US Foods Holding Corp. in February 2016. US Foods Holding Corp. was incorporated in 2007 and is headquartered in Rosemont, Illinois.