Popeyes Louisiana Kitchen (NASDAQ: PLKI) and Red Robin Gourmet Burgers (NASDAQ:RRGB) are both cyclical consumer goods & services companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, dividends, risk, valuation, earnings and institutional ownership.

Profitability

This table compares Popeyes Louisiana Kitchen and Red Robin Gourmet Burgers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Popeyes Louisiana Kitchen 15.08% 490.51% 15.48%
Red Robin Gourmet Burgers 0.64% 8.00% 3.18%

Analyst Recommendations

This is a summary of current recommendations and price targets for Popeyes Louisiana Kitchen and Red Robin Gourmet Burgers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Popeyes Louisiana Kitchen 1 4 1 0 2.00
Red Robin Gourmet Burgers 0 5 6 0 2.55

Popeyes Louisiana Kitchen currently has a consensus price target of $69.75, indicating a potential downside of 11.68%. Red Robin Gourmet Burgers has a consensus price target of $71.60, indicating a potential upside of 4.68%. Given Red Robin Gourmet Burgers’ stronger consensus rating and higher probable upside, analysts clearly believe Red Robin Gourmet Burgers is more favorable than Popeyes Louisiana Kitchen.

Valuation & Earnings

This table compares Popeyes Louisiana Kitchen 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
Popeyes Louisiana Kitchen N/A N/A N/A $1.96 40.29
Red Robin Gourmet Burgers $1.32 billion 0.67 $131.93 million $0.64 106.88

Red Robin Gourmet Burgers has higher revenue and earnings than Popeyes Louisiana Kitchen. Popeyes Louisiana Kitchen 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.

Volatility and Risk

Popeyes Louisiana Kitchen has a beta of -0.11, suggesting that its share price is 111% less volatile than the S&P 500. Comparatively, Red Robin Gourmet Burgers has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500.

Insider and Institutional Ownership

97.6% of Popeyes Louisiana Kitchen shares are owned by institutional investors. 2.2% of Popeyes Louisiana Kitchen shares are owned by company insiders. Comparatively, 2.7% of Red Robin Gourmet Burgers 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.

Summary

Red Robin Gourmet Burgers beats Popeyes Louisiana Kitchen on 6 of the 11 factors compared between the two stocks.

Popeyes Louisiana Kitchen Company Profile

Popeyes Louisiana Kitchen, Inc. (Popeyes) develops, operates and franchises quick-service restaurants (QSRs) under the trade names Popeyes Louisiana Kitchen and Popeyes Chicken & Biscuits. The Company conducts its operations through two segments: franchise operations and Company-operated restaurants. The Company-operated restaurant segment includes the operation of Company-owned restaurants. The franchise operations segment consists of domestic and international franchising activities. The Company’s Louisiana style menu features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. As of December 25, 2016, the Company operated and franchised 2,688 Popeyes restaurants in 48 states, the District of Columbia, three territories and 25 foreign countries. As of December 25, 2016, of the 55 Company-operated restaurants, approximately 84% were concentrated in Louisiana, North Carolina and Tennessee.

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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