Jefferies Financial Group (NYSE: JEF) and Hormel Foods (NYSE:HRL) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, dividends, analyst recommendations, profitability, risk, institutional ownership and valuation.
Insider & Institutional Ownership
78.7% of Jefferies Financial Group shares are owned by institutional investors. Comparatively, 40.6% of Hormel Foods shares are owned by institutional investors. 7.3% of Jefferies Financial Group shares are owned by insiders. Comparatively, 3.5% of Hormel Foods shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Jefferies Financial Group pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. Hormel Foods pays an annual dividend of $0.75 per share and has a dividend yield of 2.1%. Jefferies Financial Group pays out 24.2% of its earnings in the form of a dividend. Hormel Foods pays out 47.8% 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. Hormel Foods has raised its dividend for 51 consecutive years. Hormel Foods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Jefferies Financial Group has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500. Comparatively, Hormel Foods has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500.
Valuation & Earnings
This table compares Jefferies Financial Group and Hormel Foods’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Jefferies Financial Group||$11.44 billion||0.70||$171.72 million||$1.65||14.14|
|Hormel Foods||$9.17 billion||2.10||$846.73 million||$1.57||23.10|
Hormel Foods has lower revenue, but higher earnings than Jefferies Financial Group. Jefferies Financial Group is trading at a lower price-to-earnings ratio than Hormel Foods, indicating that it is currently the more affordable of the two stocks.
This table compares Jefferies Financial Group and Hormel Foods’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Jefferies Financial Group||0.45%||4.80%||1.04%|
This is a breakdown of current ratings and recommmendations for Jefferies Financial Group and Hormel Foods, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Jefferies Financial Group||0||0||0||0||N/A|
Hormel Foods has a consensus target price of $35.56, indicating a potential downside of 1.97%. Given Hormel Foods’ higher probable upside, analysts plainly believe Hormel Foods is more favorable than Jefferies Financial Group.
Hormel Foods beats Jefferies Financial Group on 10 of the 16 factors compared between the two stocks.
Jefferies Financial Group Company Profile
Jefferies Group LLC and its subsidiaries operate as a securities and investment banking firm. The Company operates in two business segments: Capital Markets segment consists of the Company’s securities and commodities trading activities and its investment banking activities, and Asset Management segment includes asset management activities and related services. On July 1, 2011, the Company acquired the Bache Global Commodities Group from Prudential Financial, Inc., and as of November 30, 2011, the Company operated a futures commission merchant through Jefferies Bache, LLC in the United States and a global commodities and financial derivatives broker through Jefferies Bache Limited in the United Kingdom. Effective March 1, 2013, Leucadia National Corp (Leucadia) acquired the remaining 71.4% interest in Jefferies Group Inc . Effective March 1, 2013, Leucadia National Corp (Leucadia) acquired the remaining 71.4% interest in Jefferies Group Inc.
Hormel Foods Company Profile
Hormel Foods Corporation produces and markets various meat and food products in the United States and internationally. The company operates through five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and International & Other. It offers various perishable meat products, including fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamole, and bacon; and shelf-stable products, such as canned luncheon meats, peanut butter, chilies, shelf-stable microwaveable meals, hash, stews, meat spreads, flour and corn tortillas, salsas, tortilla chips, and other products. The company also provides turkey products; nutritional food products and supplements; dessert and drink mixes; and industrial gelatin products. It sells its products through sales personnel, as well as through independent brokers and distributors. The company was formerly known as Geo. A. Hormel & Company and changed its name to Hormel Foods Corporation in January 1995. Hormel Foods Corporation was founded in 1891 and is based in Austin, Minnesota.
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