Reviewing Wendy’s Company (The) (WEN) & Red Robin Gourmet Burgers (RRGB)
Wendy’s Company (The) (NASDAQ: WEN) and Red Robin Gourmet Burgers (NASDAQ:RRGB) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, profitability, risk, valuation, earnings and analyst recommendations.
This is a summary of recent ratings for Wendy’s Company (The) and Red Robin Gourmet Burgers, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Wendy’s Company (The)||0||9||7||0||2.44|
|Red Robin Gourmet Burgers||0||4||6||0||2.60|
Wendy’s Company (The) currently has a consensus price target of $15.57, indicating a potential upside of 7.98%. Red Robin Gourmet Burgers has a consensus price target of $72.00, indicating a potential upside of 27.32%. Given Red Robin Gourmet Burgers’ stronger consensus rating and higher possible upside, analysts clearly believe Red Robin Gourmet Burgers is more favorable than Wendy’s Company (The).
Wendy’s Company (The) pays an annual dividend of $0.28 per share and has a dividend yield of 1.9%. Red Robin Gourmet Burgers does not pay a dividend. Wendy’s Company (The) pays out 75.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Valuation and Earnings
This table compares Wendy’s Company (The) and Red Robin Gourmet Burgers’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Wendy’s Company (The)||$1.28 billion||2.74||$385.41 million||$0.37||38.97|
|Red Robin Gourmet Burgers||$1.32 billion||0.55||$131.93 million||$0.64||88.36|
Wendy’s Company (The) has higher revenue, but lower earnings than Red Robin Gourmet Burgers. Wendy’s Company (The) is trading at a lower price-to-earnings ratio than Red Robin Gourmet Burgers, indicating that it is currently the more affordable of the two stocks.
This table compares Wendy’s Company (The) and Red Robin Gourmet Burgers’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Wendy’s Company (The)||7.68%||19.67%||2.71%|
|Red Robin Gourmet Burgers||0.64%||8.00%||3.18%|
Risk & Volatility
Wendy’s Company (The) has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Red Robin Gourmet Burgers has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.
Institutional and Insider Ownership
76.5% of Wendy’s Company (The) shares are held by institutional investors. 26.5% of Wendy’s Company (The) shares are held by company insiders. Comparatively, 2.7% of Red Robin Gourmet Burgers shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Wendy’s Company (The) beats Red Robin Gourmet Burgers on 9 of the 16 factors compared between the two stocks.
Wendy’s Company (The) Company Profile
The Wendy’s Company is the parent company of subsidiary holding company Wendy’s Restaurants, LLC (Wendy’s Restaurants). Wendy’s Restaurants is the parent company of Wendy’s International, LLC (Wendy’s), which is the owner and franchisor of the Wendy’s restaurant system in the United States. Wendy’s is a restaurant company specializing in the hamburger sandwich segment. Wendy’s is engaged in the business of operating, developing and franchising a system of restaurants serving food. The Company operated approximately 6,080 Wendy’s restaurants in operation in North America, as of January 1, 2017. Of these restaurants, 330 were operated by the Company and 5,768 by a total of 376 franchisees, as of January 1, 2017. In addition, as of January 1, 2017, there were 439 franchised Wendy’s restaurants in operation in 29 countries and territories other than North America. Wendy’s is also a partner in a restaurant real estate joint venture with a subsidiary of Restaurant Brands International Inc.
Red Robin Gourmet Burgers Company Profile
Red Robin Gourmet Burgers, Inc., together with its subsidiaries, primarily develops, operates, and franchises full-service restaurants in North America and focuses on serving selection of gourmet burgers. The Company’s menu features a line of gourmet burgers, which it makes from ground beef, as well as its line of Red’s Tavern Double Burgers and its Red Robin’s line of half-pound Angus beef burgers with various toppings. The Company also offers burgers made from chicken breasts, fish fillets, turkey patties, as well as vegetarian and vegan options. The Company offered a selection of buns, including ciabatta, gluten free, sesame, onion, whole grain, jalapeno and lettuce wraps a range of toppings, including fresh guacamole, house made barbeque sauces, aiolis, grilled pineapple, crispy onion straws, sauteed mushrooms, fried jalapenos, bruschetta salsa, coleslaw, eight different cheese choices and a fried egg, as of December 25, 2016.
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