Critical Survey: Popeyes Louisiana Kitchen (PLKI) and Sonic Corp. (NASDAQ:SONC)
Sonic Corp. (NASDAQ: SONC) and Popeyes Louisiana Kitchen (NASDAQ:PLKI) are both retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitabiliy, analyst recommendations, institutional ownership, earnings, dividends and risk.
Institutional and Insider Ownership
97.5% of Sonic Corp. shares are owned by institutional investors. Comparatively, 97.6% of Popeyes Louisiana Kitchen shares are owned by institutional investors. 6.2% of Sonic Corp. shares are owned by insiders. Comparatively, 2.2% of Popeyes Louisiana Kitchen shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Sonic Corp. and Popeyes Louisiana Kitchen’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Sonic Corp.||$515.82 million||1.98||$158.68 million||$1.50||16.27|
|Popeyes Louisiana Kitchen||N/A||N/A||N/A||$1.96||40.29|
Sonic Corp. has higher revenue and earnings than Popeyes Louisiana Kitchen. Sonic Corp. is trading at a lower price-to-earnings ratio than Popeyes Louisiana Kitchen, indicating that it is currently the more affordable of the two stocks.
This table compares Sonic Corp. and Popeyes Louisiana Kitchen’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Popeyes Louisiana Kitchen||15.08%||490.51%||15.48%|
Volatility & Risk
Sonic Corp. has a beta of 1.74, indicating that its stock price is 74% more volatile than the S&P 500. Comparatively, Popeyes Louisiana Kitchen has a beta of -0.11, indicating that its stock price is 111% less volatile than the S&P 500.
This is a breakdown of current recommendations for Sonic Corp. and Popeyes Louisiana Kitchen, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Popeyes Louisiana Kitchen||1||5||1||0||2.00|
Sonic Corp. presently has a consensus price target of $27.45, suggesting a potential upside of 12.52%. Popeyes Louisiana Kitchen has a consensus price target of $67.00, suggesting a potential downside of 15.16%. Given Sonic Corp.’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Sonic Corp. is more favorable than Popeyes Louisiana Kitchen.
Sonic Corp. pays an annual dividend of $0.56 per share and has a dividend yield of 2.3%. Popeyes Louisiana Kitchen does not pay a dividend. Sonic Corp. pays out 37.3% of its earnings in the form of a dividend.
Sonic Corp. beats Popeyes Louisiana Kitchen on 7 of the 13 factors compared between the two stocks.
Sonic Corp. Company Profile
Sonic Corp. operates and franchises the chain of drive-thru restaurants (Sonic Drive-Ins) in the United States. As of August 31, 2016, 3,557 Sonic Drive-Ins were in operation from coast to coast in 45 states, consisting of 345 Company drive-thrus and 3,212 franchise drive-thrus. As of August 31, 2016, its restaurant design and construction consisted of a kitchen housed in a one-story building, which was approximately 1,500 square feet, flanked by canopy-covered rows of 16 to 24 parking spaces, with each space having its own payment terminal, intercom speaker system and menu board. At a Sonic Drive-In, a customer drives into one of the parking spaces, orders through the intercom speaker system and has the food delivered by a carhop and Sonic Drive-Ins also include a drive-thru lane and patio seating to provide customers with alternative dining options. Its food items include specialty drinks, such as cherry limeades and slushes, ice cream desserts and chicken sandwiches and hamburgers.
Popeyes Louisiana Kitchen Company Profile
Popeyes Louisiana Kitchen, Inc. (Popeyes) develops, operates and franchises quick-service restaurants (QSRs) under the trade names Popeyes Louisiana Kitchen and Popeyes Chicken & Biscuits. The Company conducts its operations through two segments: franchise operations and Company-operated restaurants. The Company-operated restaurant segment includes the operation of Company-owned restaurants. The franchise operations segment consists of domestic and international franchising activities. The Company’s Louisiana style menu features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. As of December 25, 2016, the Company operated and franchised 2,688 Popeyes restaurants in 48 states, the District of Columbia, three territories and 25 foreign countries. As of December 25, 2016, of the 55 Company-operated restaurants, approximately 84% were concentrated in Louisiana, North Carolina and Tennessee.
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