Head-To-Head Analysis: Kellogg (K) versus Darling Ingredients (DAR)

Kellogg (NYSE: K) and Darling Ingredients (NYSE:DAR) are both mid-cap consumer staples companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, dividends, valuation, profitability, institutional ownership, earnings and analyst recommendations.

Institutional and Insider Ownership

86.6% of Kellogg shares are owned by institutional investors. Comparatively, 96.0% of Darling Ingredients shares are owned by institutional investors. 1.3% of Kellogg shares are owned by company insiders. Comparatively, 2.0% of Darling Ingredients shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Kellogg pays an annual dividend of $2.16 per share and has a dividend yield of 3.3%. Darling Ingredients does not pay a dividend. Kellogg pays out 96.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kellogg has raised its dividend for 12 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and target prices for Kellogg and Darling Ingredients, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kellogg 2 7 2 0 2.00
Darling Ingredients 0 1 4 0 2.80

Kellogg currently has a consensus price target of $71.36, suggesting a potential upside of 9.49%. Darling Ingredients has a consensus price target of $19.40, suggesting a potential upside of 19.61%. Given Darling Ingredients’ stronger consensus rating and higher possible upside, analysts clearly believe Darling Ingredients is more favorable than Kellogg.

Earnings and Valuation

This table compares Kellogg and Darling Ingredients’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Kellogg $13.01 billion 1.73 $694.00 million $2.24 29.10
Darling Ingredients $3.40 billion 0.79 $102.31 million $0.39 41.59

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

Profitability

This table compares Kellogg and Darling Ingredients’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kellogg 6.15% 73.92% 9.27%
Darling Ingredients 1.76% 2.96% 1.32%

Risk and Volatility

Kellogg has a beta of 0.49, indicating that its stock price is 51% less volatile than the S&P 500. Comparatively, Darling Ingredients has a beta of 1.54, indicating that its stock price is 54% more volatile than the S&P 500.

Summary

Kellogg beats Darling Ingredients on 9 of the 17 factors compared between the two stocks.

About Kellogg

Kellogg Company is a manufacturer and marketer of ready-to-eat cereal and convenience foods. The Company’s principal products are ready-to-eat cereals and convenience foods, such as cookies, crackers, savory snacks, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles and veggie foods. Its segments include U.S. Morning Foods, which includes cereal, toaster pastries, health and wellness bars, and beverages; U.S. Snacks, which includes cookies, crackers, cereal bars, savory snacks and fruit-flavored snacks; U.S. Specialty, which represents food away from home channels, including food service, convenience, vending, Girl Scouts and food manufacturing; North America Other, which includes the U.S. Frozen, Kashi and Canada operating segments; Europe, which consists of European countries; Latin America, which consists of Central and South America and includes Mexico, and Asia Pacific, which consists of Sub-Saharan Africa, Australia and other Asian and Pacific markets.

About Darling Ingredients

Darling Ingredients Inc. (Darling) is a developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a range of ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy and fertilizer industries. The Company operates through three segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. The Company collects and transforms all aspects of animal by-product streams into useable and specialty ingredients, such as gelatin, edible fats, feed-grade fats, animal proteins and meals, plasma, pet food ingredients, organic fertilizers, yellow grease, fuel feedstocks, green energy, natural casings and hides. In addition, the Company provides grease trap services to food service establishments, environmental services to food processors and sells restaurant cooking oil delivery and collection equipment.

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