Critical Contrast: BRF (BRFS) versus Leucadia National (LUK)

Leucadia National (NYSE: LUK) and BRF (NYSE:BRFS) are both mid-cap multi-sector conglomerates companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, risk, profitability, analyst recommendations, valuation, earnings and dividends.

Dividends

Leucadia National pays an annual dividend of $0.40 per share and has a dividend yield of 1.6%. BRF does not pay a dividend. Leucadia National pays out 24.2% of its earnings in the form of a dividend. BRF has raised its dividend for 2 consecutive years.



Analyst Recommendations

This is a summary of current ratings and target prices for Leucadia National and BRF, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Leucadia National 0 0 0 0 N/A
BRF 0 5 0 0 2.00

BRF has a consensus target price of $15.00, suggesting a potential upside of 122.88%. Given BRF’s higher possible upside, analysts plainly believe BRF is more favorable than Leucadia National.

Insider and Institutional Ownership

77.4% of Leucadia National shares are held by institutional investors. Comparatively, 7.6% of BRF shares are held by institutional investors. 10.0% of Leucadia National shares are held by insiders. Comparatively, 1.0% of BRF shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Leucadia National and BRF’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Leucadia National 0.45% 4.80% 1.04%
BRF -2.96% -1.81% -0.46%

Volatility and Risk

Leucadia National has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500. Comparatively, BRF has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500.

Valuation and Earnings

This table compares Leucadia National and BRF’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Leucadia National $11.44 billion 0.74 $171.72 million $1.65 14.88
BRF $10.48 billion 0.51 -$352.53 million ($0.16) -42.06

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

Summary

Leucadia National beats BRF on 11 of the 14 factors compared between the two stocks.

Leucadia National Company Profile

Leucadia National Corporation operates as a diversified holding company that focuses on financial service businesses and investments in the Americas, Europe, and Asia. Its services include equities research, sales, and trading; financing, securities lending, and other brokerage; wealth management; fixed income sales and trading; futures; equity capital markets, debt capital markets, and financial advisory; and asset management services. The company also provides online foreign exchange trading, contract for difference trading, spread betting, and related services. In addition, it develops and owns residential and mixed-use real estate properties in California, New York, Florida, Virginia, South Carolina, and Maine; provides capital solutions, investment sales advisory, and mortgage servicing for multifamily and commercial properties; and purchases automobile installment contracts, as well as owns and manages a portfolio of leases on used Harley-Davidson motorcycles. Further, it processes and markets fresh and chilled boxed beef, ground beef, beef by-products, consumer-ready beef and pork, and wet blue leather; oil and gas properties in the Bakken Shale oil field in North Dakota and Montana, and the Denver-Julesburg Basin in Wyoming; owns and operates 28 automobile dealerships; offers fixed wireless broadband services in Italy; manufactures and markets plastic netting and wood products; and mines gold and silver ores. The company was formerly known as Talcott National Corp. and changed its name to Leucadia National Corporation in June 1980. Leucadia National Corporation was founded in 1968 and is headquartered in New York, New York.

BRF Company Profile

BRF S.A. focuses on raising, producing, and slaughtering poultry and pork in Brazil, Latin America, Europe, the Middle East, Africa, and Asia. The company also processes, produces and sells fresh meat, processed foods, pasta, sauce, mayonnaise, frozen vegetables and soybean by-products. Its product portfolio comprise whole chickens and frozen cuts of chicken, turkey, and pork; ham products, bologna, sausages, frankfurters, and other smoked products; hamburgers, breaded meat products, and meatballs; lasagnas, pizzas, cheese breads, pies, and frozen vegetables; margarine, sauces and mayonnaise; and soy meal and refined soy flour, and animal feed. The company primarily sells its products under the Sadia, Perdigão, Qualy, Chester, Perdix, and Paty brands. It serves supermarkets, retail stores, wholesalers, restaurants, and other institutional customers. BRF S.A. also exports its products. The company was formerly known as BRF-Brasil Foods S.A. and changed its name to BRF S.A. in April 2013. BRF S.A. was founded in 1900 and is headquartered in Itajai, Brazil.

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