Ingredion (INGR) & Freshpet (NASDAQ:FRPT) Critical Review

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

Volatility & Risk

Freshpet has a beta of 1.66, meaning that its share price is 66% more volatile than the S&P 500. Comparatively, Ingredion has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.



Insider and Institutional Ownership

74.5% of Freshpet shares are held by institutional investors. Comparatively, 87.1% of Ingredion shares are held by institutional investors. 6.8% of Freshpet shares are held by insiders. Comparatively, 1.8% of Ingredion shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Freshpet and Ingredion’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Freshpet $156.38 million 4.94 -$4.26 million ($0.12) -182.92
Ingredion $6.18 billion 1.32 $519.00 million $7.70 14.62

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

Analyst Ratings

This is a summary of current ratings and price targets for Freshpet and Ingredion, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Freshpet 0 4 3 0 2.43
Ingredion 0 2 3 0 2.60

Freshpet currently has a consensus target price of $20.00, suggesting a potential downside of 8.88%. Ingredion has a consensus target price of $130.00, suggesting a potential upside of 15.48%. Given Ingredion’s stronger consensus rating and higher possible upside, analysts clearly believe Ingredion is more favorable than Freshpet.

Profitability

This table compares Freshpet and Ingredion’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Freshpet -2.97% -4.35% -3.70%
Ingredion 8.71% 19.75% 9.61%

Dividends

Ingredion pays an annual dividend of $2.40 per share and has a dividend yield of 2.1%. Freshpet does not pay a dividend. Ingredion pays out 31.2% of its earnings in the form of a dividend. Ingredion has raised its dividend for 5 consecutive years.

Summary

Ingredion beats Freshpet on 11 of the 15 factors compared between the two stocks.

Freshpet Company Profile

Freshpet, Inc. manufactures and markets natural fresh products, refrigerated meals, and treats for dogs and cats in the United States, Canada, and the United Kingdom. The company sells its products under the Freshpet brand; and Dognation and Dog Joy labels through various classes of retail, including grocery, mass, club, pet specialty, and natural, as well as online. Freshpet, Inc. was incorporated in 2004 and is headquartered in Secaucus, New Jersey.

Ingredion Company Profile

Ingredion Incorporated, together with its subsidiaries, produces and sells starches and sweeteners for various industries. The company operates through four segments: North America, South America, Asia Pacific and Europe, and Middle East and Africa. It offers sweetener products comprising glucose syrups, high maltose syrups, high fructose corn syrups, caramel colors, dextrose, polyols, maltodextrins, glucose and syrup solids, as well as food-grade and industrial starches, and biomaterials. The company also provides animal feed products; edible corn oil; refined corn oil to packers of cooking oil and to producers of margarine, salad dressings, shortening, mayonnaise, and other foods; and corn gluten feed used as protein feed for chickens, pet food, and aquaculture. Its products are derived primarily from processing corn and other starch-based materials, such as tapioca, potato, and rice. The company serves food, beverage, paper and corrugating products, brewing, pharmaceutical, textile, and personal care industries, as well as animal feed and corn oil markets. The company was formerly known as Corn Products International, Inc. and changed its name to Ingredion Incorporated in June 2012. Ingredion Incorporated was founded in 1906 and is headquartered in Westchester, Illinois.

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