Head-To-Head Comparison: Lancaster Colony (LANC) vs. Lamb Weston (LW)

Lamb Weston (NYSE: LW) and Lancaster Colony (NASDAQ:LANC) are both mid-cap consumer staples companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, valuation, earnings, analyst recommendations, risk and institutional ownership.

Valuation & Earnings

This table compares Lamb Weston and Lancaster Colony’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lamb Weston $3.17 billion 2.94 $324.80 million $2.32 27.48
Lancaster Colony $1.20 billion 2.80 $115.31 million $4.62 26.58



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

Dividends

Lamb Weston pays an annual dividend of $0.76 per share and has a dividend yield of 1.2%. Lancaster Colony pays an annual dividend of $2.40 per share and has a dividend yield of 2.0%. Lamb Weston pays out 32.8% of its earnings in the form of a dividend. Lancaster Colony pays out 51.9% 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. Lancaster Colony has increased its dividend for 55 consecutive years. Lancaster Colony is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

80.7% of Lamb Weston shares are held by institutional investors. Comparatively, 53.2% of Lancaster Colony shares are held by institutional investors. 0.3% of Lamb Weston shares are held by insiders. Comparatively, 31.9% of Lancaster Colony shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Lamb Weston and Lancaster Colony, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lamb Weston 0 2 3 1 2.83
Lancaster Colony 0 0 3 0 3.00

Lamb Weston presently has a consensus target price of $59.17, indicating a potential downside of 7.20%. Lancaster Colony has a consensus target price of $153.00, indicating a potential upside of 24.59%. Given Lancaster Colony’s stronger consensus rating and higher possible upside, analysts plainly believe Lancaster Colony is more favorable than Lamb Weston.

Volatility and Risk

Lamb Weston has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, Lancaster Colony has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500.

Profitability

This table compares Lamb Weston and Lancaster Colony’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lamb Weston 11.75% -69.53% 14.24%
Lancaster Colony 9.84% 19.65% 15.67%

Summary

Lancaster Colony beats Lamb Weston on 10 of the 17 factors compared between the two stocks.

Lamb Weston Company Profile

Lamb Weston Holdings, Inc. produces and markets value-added frozen potato products worldwide. It operates through four segments: Global, Foodservice, Retail, and Other. The company offers frozen potatoes, sweet potatoes, and appetizers under the Lamb Weston brand name, as well as various customer labels. It serves retail and foodservice customers; grocery, mass, club, and specialty retailers; and businesses, independent restaurants, regional chain restaurants, and convenience stores, as well as educational institutions. The company was founded in 1950 and is headquartered in Eagle, Idaho.

Lancaster Colony Company Profile

Lancaster Colony Corporation manufactures and markets specialty food products for the retail and foodservice markets in the United States. It offers salad dressings and sauces under the Marzetti, Marzetti Simply Dressed, Cardini's, and Girard's brands; vegetable dips and fruit dips under the Marzetti brand; frozen garlic breads under the New York BRAND Bakery, Mamma Bella, and Mamma Bella's brands; and frozen Parkerhouse style yeast and dinner rolls under the Sister Schubert's and Mary B's brands. The company also provides dry egg noodles under the Inn Maid and Amish Kitchen brands; frozen specialty noodles under the Reames and Aunt Vi's brands; croutons and salad toppings under the New York BRAND Bakery, New York BRAND Bakery Texas Toast, Chatham Village, Cardini's, Marzetti Simply Dressed, and Marzetti brands; sprouted grain bakery products under the Angelic Bakehouse and Flatzza brands; flatbread wraps and pizza crusts under the Flatout brand; and caviar under the Romanoff brand name. In addition, it manufactures and sells other products to brand license agreements, including Olive Garden's dressings and Jack Daniel's mustards, as well as endorsement agreements, such as Hungry Girl flatbreads. The company's products are sold through sales personnel, food brokers, and distributors to retailers and restaurants, as well as to industrial customers. Lancaster Colony Corporation was founded in 1961 and is based in Westerville, Ohio.

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