McDonald’s Corporation (NYSE: MCD) and Carrols Restaurant Group (NASDAQ:TAST) are both retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitability, analyst recommendations, dividends, earnings and institutional ownership.

Earnings and Valuation

This table compares McDonald’s Corporation and Carrols Restaurant Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
McDonald’s Corporation $24.18 billion 5.36 $9.60 billion $6.11 26.18
Carrols Restaurant Group $999.03 million 0.39 $80.24 million $0.72 15.14

McDonald’s Corporation has higher revenue and earnings than Carrols Restaurant Group. Carrols Restaurant Group is trading at a lower price-to-earnings ratio than McDonald’s Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

67.9% of McDonald’s Corporation shares are owned by institutional investors. Comparatively, 86.8% of Carrols Restaurant Group shares are owned by institutional investors. 0.2% of McDonald’s Corporation shares are owned by insiders. Comparatively, 5.3% of Carrols Restaurant Group shares are owned 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.

Analyst Recommendations

This is a summary of current ratings and price targets for McDonald’s Corporation and Carrols Restaurant Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
McDonald’s Corporation 0 9 22 0 2.71
Carrols Restaurant Group 0 0 1 1 3.50

McDonald’s Corporation presently has a consensus price target of $162.05, indicating a potential upside of 1.30%. Carrols Restaurant Group has a consensus price target of $16.50, indicating a potential upside of 51.38%. Given Carrols Restaurant Group’s stronger consensus rating and higher probable upside, analysts clearly believe Carrols Restaurant Group is more favorable than McDonald’s Corporation.

Dividends

McDonald’s Corporation pays an annual dividend of $3.76 per share and has a dividend yield of 2.4%. Carrols Restaurant Group does not pay a dividend. McDonald’s Corporation pays out 61.5% of its earnings in the form of a dividend. McDonald’s Corporation has raised its dividend for 40 consecutive years.

Profitability

This table compares McDonald’s Corporation and Carrols Restaurant Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
McDonald’s Corporation 21.00% -264.89% 16.21%
Carrols Restaurant Group 3.44% 6.33% 1.86%

Risk & Volatility

McDonald’s Corporation has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, Carrols Restaurant Group has a beta of 0.02, meaning that its share price is 98% less volatile than the S&P 500.

Summary

McDonald’s Corporation beats Carrols Restaurant Group on 10 of the 18 factors compared between the two stocks.

About McDonald’s Corporation

McDonald’s Corporation (McDonald’s) operates and franchises McDonald’s restaurants. The Company’s restaurants serve a locally relevant menu of food and drinks sold at various price points in over 100 countries. The Company’s segments include U.S., International Lead Markets, High Growth Markets, and Foundational Markets and Corporate. The U.S. segment focuses on offering a platform for authentic ingredients that allows customers to customize their sandwiches. Its High Growth Markets segment includes its operations in markets, such as China, Italy, Korea, Poland, Russia, Spain, Switzerland, the Netherlands and related markets. The International Lead markets segment includes the Company’s operations in various markets, such as Australia, Canada, France, Germany, the United Kingdom and related markets. The Foundational markets and Corporate segment is engaged in operating restaurants and increasing convenience to customers, including through drive-thru and delivery.

About Carrols Restaurant Group

Carrols Restaurant Group, Inc. is a holding company and conducts all of its operations through its subsidiary, Carrols Corporation (Carrols) and Carrols’ subsidiary, Carrols LLC. The Company is a restaurant company and Burger King franchisee in the United States. As of January 1, 2017, the Company had owned and operated 753 Burger King restaurants under the name Burger King in 16 Northeastern, Midwestern and Southeastern states. Burger King restaurants feature the flame-broiled Whopper sandwich, as well as a range of hamburgers, chicken and other specialty sandwiches, French fries, salads, breakfast items, hot dogs, snacks, smoothies, frappes and other offerings. The Company’s Burger King restaurants are located in various states, such as Illinois, Indiana, Kentucky, Maine, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Vermont, Virginia and West Virginia.

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