Biglari Holdings (NYSE: BH) and Starbucks Corporation (NASDAQ:SBUX) are both retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, risk and dividends.

Dividends

Starbucks Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 1.9%. Biglari Holdings does not pay a dividend. Starbucks Corporation pays out 50.8% of its earnings in the form of a dividend.

Insider and Institutional Ownership

89.0% of Biglari Holdings shares are owned by institutional investors. Comparatively, 71.0% of Starbucks Corporation shares are owned by institutional investors. 51.2% of Biglari Holdings shares are owned by company insiders. Comparatively, 3.4% of Starbucks Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Biglari Holdings and Starbucks Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Biglari Holdings $839.07 million 0.74 $43.14 million $12.92 23.37
Starbucks Corporation $22.40 billion 3.45 $5.14 billion $1.97 27.18

Starbucks Corporation has higher revenue and earnings than Biglari Holdings. Biglari Holdings is trading at a lower price-to-earnings ratio than Starbucks Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Biglari Holdings and Starbucks Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Biglari Holdings 0 1 0 0 2.00
Starbucks Corporation 0 10 19 2 2.74

Starbucks Corporation has a consensus target price of $64.36, indicating a potential upside of 20.22%. Given Starbucks Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Starbucks Corporation is more favorable than Biglari Holdings.

Profitability

This table compares Biglari Holdings and Starbucks Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Biglari Holdings 1.92% 3.15% 1.52%
Starbucks Corporation 12.93% 52.82% 21.42%

Volatility and Risk

Biglari Holdings has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500. Comparatively, Starbucks Corporation has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500.

Summary

Starbucks Corporation beats Biglari Holdings on 13 of the 17 factors compared between the two stocks.

About Biglari Holdings

Biglari Holdings Inc. is a holding company owning subsidiaries engaged in various business activities, including media, property and casualty insurance, and restaurants The Company’s segments include Restaurant Operations, First Guard, Maxim, Other and Corporate. The Company’s restaurant operations’ activities are conducted through approximately two restaurant concepts operated by subsidiaries Steak n Shake Inc. (Steak n Shake) and Western Sizzlin Corporation (Western). Steak n Shake is engaged in the ownership, operation and franchising of Steak n Shake restaurants. Western is engaged primarily in the franchising of restaurants. The Company’s insurance business consists of First Guard Insurance Company and its agency, 1st Guard Corporation. First Guard is a direct underwriter of commercial trucking insurance, selling physical damage and non-trucking liability insurance to truckers. Its media business consists of Maxim. Maxim’s business lies principally in media and licensing.

About Starbucks Corporation

Starbucks Corporation (Starbucks) is a roaster, marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries. The Company operates through four segments: Americas, which is inclusive of the United States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and Africa (EMEA), and Channel Development. The Company’s Americas, CAP, and EMEA segments include both company-operated and licensed stores. Its Channel Development segment includes roasted whole bean and ground coffees, Tazo teas, Starbucks- and Tazo-branded single-serve products, a range of ready-to-drink beverages, such as Frappuccino, Starbucks Doubleshot and Starbucks Refreshers beverages and other branded products sold across the world through channels, such as grocery stores, warehouse clubs, specialty retailers, convenience stores and the United States foodservice accounts.

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