Flowers Foods (NYSE:FLO) versus Kraft Heinz (NASDAQ:KHC) Critical Comparison
by Danessa Lincoln · The Markets DailyFlowers Foods (NYSE:FLO – Get Free Report) and Kraft Heinz (NASDAQ:KHC – Get Free Report) are both consumer staples companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, institutional ownership and valuation.
Institutional & Insider Ownership
75.5% of Flowers Foods shares are owned by institutional investors. Comparatively, 78.2% of Kraft Heinz shares are owned by institutional investors. 11.6% of Flowers Foods shares are owned by company insiders. Comparatively, 0.4% of Kraft Heinz shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Analyst Recommendations
This is a summary of current ratings and recommmendations for Flowers Foods and Kraft Heinz, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Flowers Foods | 3 | 4 | 0 | 0 | 1.57 |
| Kraft Heinz | 5 | 14 | 0 | 1 | 1.85 |
Flowers Foods currently has a consensus target price of $11.17, suggesting a potential upside of 38.46%. Kraft Heinz has a consensus target price of $23.53, suggesting a potential upside of 2.04%. Given Flowers Foods’ higher possible upside, equities research analysts plainly believe Flowers Foods is more favorable than Kraft Heinz.
Dividends
Flowers Foods pays an annual dividend of $0.99 per share and has a dividend yield of 12.3%. Kraft Heinz pays an annual dividend of $1.60 per share and has a dividend yield of 6.9%. 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. Kraft Heinz pays out -32.4% of its earnings in the form of a dividend. Flowers Foods has raised 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.
Profitability
This table compares Flowers Foods and Kraft Heinz’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Flowers Foods | 1.59% | 16.61% | 5.38% |
| Kraft Heinz | -23.44% | 7.07% | 3.68% |
Earnings and Valuation
This table compares Flowers Foods and Kraft Heinz”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Flowers Foods | $5.26 billion | 0.32 | $83.82 million | $0.40 | 20.16 |
| Kraft Heinz | $24.94 billion | 1.10 | -$5.85 billion | ($4.94) | -4.67 |
Flowers Foods has higher earnings, but lower revenue 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.
Risk and Volatility
Flowers Foods has a beta of 0.39, indicating that its stock price is 61% less volatile than the S&P 500. Comparatively, Kraft Heinz has a beta of 0.07, indicating that its stock price is 93% less volatile than the S&P 500.
Summary
Flowers Foods beats Kraft Heinz on 11 of the 17 factors compared between the two stocks.
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.
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.