Medifast (MED) & McCormick & Company, Incorporated (MKC) Critical Survey

Medifast (NYSE: MED) and McCormick & Company, Incorporated (NYSE:MKC) are both consumer staples companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, risk, earnings, profitability, valuation, analyst recommendations and institutional ownership.

Analyst Ratings

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This is a breakdown of recent recommendations and price targets for Medifast and McCormick & Company, Incorporated, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Medifast 0 0 2 0 3.00
McCormick & Company, Incorporated 1 5 3 0 2.22

Medifast currently has a consensus target price of $81.50, suggesting a potential downside of 19.03%. McCormick & Company, Incorporated has a consensus target price of $111.38, suggesting a potential upside of 3.84%. Given McCormick & Company, Incorporated’s higher possible upside, analysts clearly believe McCormick & Company, Incorporated is more favorable than Medifast.

Dividends

Medifast pays an annual dividend of $1.92 per share and has a dividend yield of 1.9%. McCormick & Company, Incorporated pays an annual dividend of $2.08 per share and has a dividend yield of 1.9%. Medifast pays out 83.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. McCormick & Company, Incorporated pays out 48.8% of its earnings in the form of a dividend. McCormick & Company, Incorporated has raised its dividend for 31 consecutive years. McCormick & Company, Incorporated is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

88.2% of Medifast shares are owned by institutional investors. Comparatively, 79.8% of McCormick & Company, Incorporated shares are owned by institutional investors. 5.4% of Medifast shares are owned by company insiders. Comparatively, 19.2% of McCormick & Company, Incorporated shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Medifast and McCormick & Company, Incorporated’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Medifast $301.56 million 3.98 $27.72 million $2.29 43.96
McCormick & Company, Incorporated $4.83 billion 2.91 $477.40 million $4.26 25.18

McCormick & Company, Incorporated has higher revenue and earnings than Medifast. McCormick & Company, Incorporated is trading at a lower price-to-earnings ratio than Medifast, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Medifast has a beta of 0.26, indicating that its stock price is 74% less volatile than the S&P 500. Comparatively, McCormick & Company, Incorporated has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Profitability

This table compares Medifast and McCormick & Company, Incorporated’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Medifast 9.19% 26.39% 20.81%
McCormick & Company, Incorporated 16.04% 23.39% 6.49%

Summary

McCormick & Company, Incorporated beats Medifast on 11 of the 17 factors compared between the two stocks.

Medifast Company Profile

Medifast, Inc., through its subsidiaries, produces, distributes, and sells weight loss, weight management, healthy living products, and other consumable health and nutritional products. The company offers bars, bites, pretzels, puffs, oatmeal and cereal crunch products, drinks, hearty choices, pancakes, puddings, soft serves, shakes, smoothies, soft bakes, and soups under the Medifast, OPTAVIA, Thrive by Medifast, Optimal Health by OPTAVIA, Flavors of Home, and Essential 1 brands. It also provides meal replacements comprising vitamins and minerals; and hydration products, as well as other nutrients for health purposes. As of December 31, 2017, Medifast, Inc. operated 16 franchised Medifast weight control centers in Arizona, California, Louisiana, Minnesota, and Wisconsin; and 18 reseller locations in California, Maryland, and Pennsylvania. The company sells its products through various channels, including the Internet, call centers, independent health advisors, medical professionals, franchise weight loss clinics, and direct consumer marketing. Medifast, Inc. was founded in 1980 and is headquartered in Baltimore, Maryland.

McCormick & Company, Incorporated Company Profile

McCormick & Company, Incorporated is engaged in manufacturing, marketing and distributing spices, seasoning mixes, condiments and other flavorful products to the food industry, including retailers, food manufacturers and foodservice businesses. The Company’s segments include consumer and industrial. The Company is involved in the manufacturing and sales of flavorful products. As of November 30, 2016, it offered brands for consumers in approximately 150 countries and territories. The Company’s brands in the Americas include McCormick, Lawry’s, and Club House, as well as brands, such as Gourmet Garden and OLD BAY. It provides a range of products to food manufacturers and foodservice customers. The Company’s sales, distribution and production facilities are located in North America, Europe and China. It markets regional and ethnic brands, such as Zatarain’s, Stubb’s, Thai Kitchen and Simply Asia. The Company offers sensory testing, culinary research, food safety and flavor application.

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