Restaurant Brands International (NYSE: QSR) and Luby’s (NYSE:LUB) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, analyst recommendations and profitability.

Insider & Institutional Ownership

76.4% of Restaurant Brands International shares are owned by institutional investors. Comparatively, 42.9% of Luby’s shares are owned by institutional investors. 3.1% of Restaurant Brands International shares are owned by insiders. Comparatively, 35.2% of Luby’s shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Restaurant Brands International pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Luby’s does not pay a dividend. Restaurant Brands International pays out 55.6% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Restaurant Brands International and Luby’s’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Restaurant Brands International $4.32 billion 3.70 $1.91 billion $1.44 46.94
Luby’s $387.17 million 0.19 $13.97 million ($0.92) -2.67

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

Analyst Ratings

This is a summary of recent recommendations for Restaurant Brands International and Luby’s, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Restaurant Brands International 0 3 12 0 2.80
Luby’s 0 0 0 0 N/A

Restaurant Brands International currently has a consensus price target of $67.69, indicating a potential upside of 0.14%. Given Restaurant Brands International’s higher probable upside, analysts clearly believe Restaurant Brands International is more favorable than Luby’s.

Profitability

This table compares Restaurant Brands International and Luby’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Restaurant Brands International 12.66% 22.71% 3.99%
Luby’s -6.96% -4.97% -3.16%

Risk and Volatility

Restaurant Brands International has a beta of 1.77, indicating that its share price is 77% more volatile than the S&P 500. Comparatively, Luby’s has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.

Summary

Restaurant Brands International beats Luby’s on 12 of the 14 factors compared between the two stocks.

Restaurant Brands International Company Profile

Restaurant Brands International Inc. is a quick service restaurant (QSR) company. The Company had over 20,000 restaurants in more than 100 countries and the United States territories, as of December 31, 2016. It operates through two segments: Tim Hortons (TH) and Burger King (BK). Tim Hortons restaurants are quick service restaurants with a menu that includes blend coffee, tea, espresso-based hot and cold specialty drinks, baked goods, including donuts, Timbits, bagels, muffins, cookies and pastries, grilled paninis, classic sandwiches, wraps and soups, among others. Burger King restaurants are quick service restaurants that feature flame-grilled hamburgers, chicken and other specialty sandwiches, French fries, soft drinks and other food items. The Company operates coffee roasting facilities in Hamilton, Ontario and Rochester, New York. The Company sells its raw materials and supplies, including coffee, sugar, paper goods and other restaurant supplies to Tim Hortons restaurants.

Luby’s Company Profile

Luby’s, Inc., is a multi-branded company operating in the restaurant industry and in the contract food services industry. The Company is managed through three segments: Company-owned restaurants, franchise operations, and Culinary Contract Services (CSS). The company-owned restaurants brands are Luby’s Cafeteria, Fuddruckers, and Cheeseburger in Paradise with a couple of non-core restaurant locations under other brand names. As of August 31, 2016, the Company owned and operated 175 restaurants, with 127 in Texas and the remainder in other states. The Company offers franchises for the Fuddruckers brand. As of August 31, 2016, the number of franchised restaurants were 113. Culinary Contract Services consists of contract arrangements to manage food services for clients operating in three lines of business: healthcare, higher education, and corporate dining. As of August 31, 2016, the Company had 24 Culinary Contract Services contracts.

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