Financial Review: Pinnacle Foods (PF) and Nestlé (NSRGY)

Pinnacle Foods (NYSE: PF) and Nestlé (OTCMKTS:NSRGY) are both consumer staples companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, risk, earnings, valuation and institutional ownership.

Analyst Ratings

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This is a breakdown of recent ratings and target prices for Pinnacle Foods and Nestlé, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pinnacle Foods 0 0 11 0 3.00
Nestlé 0 2 0 0 2.00

Pinnacle Foods presently has a consensus target price of $64.36, suggesting a potential upside of 5.69%. Given Pinnacle Foods’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Pinnacle Foods is more favorable than Nestlé.

Valuation & Earnings

This table compares Pinnacle Foods and Nestlé’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pinnacle Foods $3.14 billion 2.30 $532.04 million $2.55 23.88
Nestlé $91.22 billion 2.61 $7.30 billion $3.41 22.40

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

Risk & Volatility

Pinnacle Foods has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, Nestlé has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Dividends

Pinnacle Foods pays an annual dividend of $1.30 per share and has a dividend yield of 2.1%. Nestlé pays an annual dividend of $2.12 per share and has a dividend yield of 2.8%. Pinnacle Foods pays out 51.0% of its earnings in the form of a dividend. Nestlé pays out 62.2% 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. Pinnacle Foods has raised its dividend for 4 consecutive years.

Insider & Institutional Ownership

97.3% of Pinnacle Foods shares are owned by institutional investors. Comparatively, 1.4% of Nestlé shares are owned by institutional investors. 1.3% of Pinnacle Foods shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Pinnacle Foods and Nestlé’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pinnacle Foods 16.92% 14.75% 4.69%
Nestlé N/A N/A N/A

Summary

Pinnacle Foods beats Nestlé on 11 of the 17 factors compared between the two stocks.

Pinnacle Foods Company Profile

Pinnacle Foods Inc. manufactures, markets, and distributes branded convenience food products in North America. It operates through four segments: Frozen, Grocery, Boulder, and Specialty. The Frozen segment offers frozen vegetables, frozen complete bagged meals, frozen prepared seafood, frozen and refrigerated bagels, frozen pizza, and full-calorie single-serve frozen dinners and entrées under the Birds Eye, Birds Eye Voila!, Van de Kamp's, Mrs. Paul's, Lender's, Celeste, Hungry-Man, and Aunt Jemima brand names. The Grocery segment provides cake/brownie mixes and frostings, cookie mixes, shelf-stable salad dressings, salad dressings, canned meat, table syrups, margarine/spread, pie and pastry fruit fillings, barbecue sauce, and shelf-stable pickles under the Duncan Hines, Vlasic, Wish-Bone, Western, Armour, Brooks, Nalley, Log Cabin, Mrs. Butterworth's, Smart Balance, Comstock, Wilderness, and Open Pit brands. The Boulder segment offers gluten-free products, natural frozen meal offerings, plant-based refrigerated and shelf-stable spreads, and plant-based protein frozen products under the Udi's, Glutino, EVOL, Earth Balance, and gardein brands. The Specialty segment provides snack products under the Hawaiian kettle style chips, Tim's Cascade, Snyder of Berlin, and Husman's brand names; and manufactures and distributes products primarily in the gluten-free, frozen meat substitutes, canned meat, and pie and pastry fruit filling categories, as well as engages in private label businesses. The company sells its products through supermarkets, grocery wholesalers and distributors, mass merchandisers, super centers, convenience stores, dollar stores, natural and organic food stores, drug stores, warehouse clubs, and e-commerce websites in the United States and Canada, as well as in military channels and foodservice locations. Pinnacle Foods Inc. is headquartered in Parsippany, New Jersey.

Nestlé Company Profile

Nestlé S.A., together with its subsidiaries, operates as a food and beverage company. The company operates through Zone Europe, Middle East and North Africa; Zone Americas; Zone Asia, Oceania and sub-Saharan Africa; Nestlé Waters; and Nestlé Nutrition segments. It offers baby foods under the Cerelac, Gerber, Gerber Graduates, NaturNes, and Nestum brands; bottled water under the Nestlé Pure Life, Perrier, Poland Spring, and S.Pellegrino brands; cereals under the Chocapic, Cini Minis, Cookie Crisp, Estrelitas, Fitness, and Nesquik Cereal brands; and chocolate and confectionery products under the Smarties, Cailler, Butterfinger, Crunch, Aero, KitKat, Nestle Toll House, Wonka, and Orion brands. The company also provides coffee products under the Nescafé, Nescafé Dolce Gusto, Nespresso, Nescafé original, Coffee-Mate, Nescafé Original 3 in 1, Nescafé Gold Blend, Nescafé Shakissimo, and Nescafé Cappuccino brands; culinary, chilled, and frozen foods under the Maggi, Stouffer's, Hot Pockets, Buitoni, DiGiorno, Jacks, Herta, TombStone, Thomy, and Lean Cuisine brands; dairy products under the Carnation, Nido, Coffee-Mate, and La Laitière brands; and drinks under the Nesquik, Nestea, and Milo brands. In addition, it offers food service products under the Chef, Chef-Mate, Maggi, Milo, Minor's, Nescafé, Nestea, Sjora, Lean Cuisine, and Stouffer's brand names; healthcare nutrition products under the Boost, Nutren Junior, Peptamen, and Resource brands; ice cream products under the Dreyer's, Extrême, Häagen-Dazs, Mövenpick, and Nestlé Ice Cream brands; and petcare products under the Purina Cat Chow, Alpo, Felix, ONE, Pro Plan, Chef Michael's, Gourmet, Fancy Feast, Beneful, Dog Chow, Bakers Complete, and Friskies brands. The company was founded in 1866 and is headquartered in Vevey, Switzerland.

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