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

Institutional & Insider Ownership

36.5% of Papa Murphy’s Holdings shares are held by institutional investors. Comparatively, 67.9% of McDonald’s Corporation shares are held by institutional investors. 3.1% of Papa Murphy’s Holdings shares are held by insiders. Comparatively, 0.2% of McDonald’s Corporation shares are held 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.

Profitability

This table compares Papa Murphy’s Holdings and McDonald’s Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Papa Murphy’s Holdings -8.43% 3.16% 1.15%
McDonald’s Corporation 21.00% -264.89% 16.21%

Dividends

McDonald’s Corporation pays an annual dividend of $3.76 per share and has a dividend yield of 2.4%. Papa Murphy’s Holdings 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 increased its dividend for 40 consecutive years.

Risk & Volatility

Papa Murphy’s Holdings has a beta of 0.06, indicating that its share price is 94% less volatile than the S&P 500. Comparatively, McDonald’s Corporation has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for Papa Murphy’s Holdings and McDonald’s Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Papa Murphy’s Holdings 0 4 0 0 2.00
McDonald’s Corporation 0 8 23 0 2.74

Papa Murphy’s Holdings currently has a consensus target price of $4.75, indicating a potential downside of 19.08%. McDonald’s Corporation has a consensus target price of $166.48, indicating a potential upside of 4.31%. Given McDonald’s Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe McDonald’s Corporation is more favorable than Papa Murphy’s Holdings.

Earnings & Valuation

This table compares Papa Murphy’s Holdings and McDonald’s Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Papa Murphy’s Holdings $125.10 million 0.80 $16.53 million ($0.63) -9.32
McDonald’s Corporation $24.18 billion 5.35 $9.60 billion $6.11 26.12

McDonald’s Corporation has higher revenue and earnings than Papa Murphy’s Holdings. Papa Murphy’s Holdings 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.

Summary

McDonald’s Corporation beats Papa Murphy’s Holdings on 13 of the 16 factors compared between the two stocks.

About Papa Murphy’s Holdings

Papa Murphy’s Holdings, Inc. is a holding company. The Company, together with its subsidiaries, is a franchisor and operator of the Take ‘N’ Bake pizza chain in the United States. The Company franchises the right to operate Take ‘N’ Bake pizza franchises and operates Take ‘N’ Bake pizza stores owned by the Company. The Company operates through three segments: Domestic Company Stores, Domestic Franchise and International. Its Domestic Franchise segment consists of its domestic franchised stores, which represent its system-wide stores and derives its revenues from franchise and development fees and the collection of franchise royalties. The Domestic Company Stores segment consists of its Company-owned stores in the United States and derives its revenues from retail sales of pizza and side items to the general public. Its International segment consists of its stores outside of the United States, all of which are franchised and derives its revenues from franchise and development fees.

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.

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