Cheesecake Factory (NASDAQ:CAKE) and Dine Brands Global (NYSE:DIN) are both retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, earnings, valuation, risk, analyst recommendations, profitability and institutional ownership.

Profitability

This table compares Cheesecake Factory and Dine Brands Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cheesecake Factory 6.02% 18.02% 8.38%
Dine Brands Global 19.41% -40.87% 4.88%

Dividends

Cheesecake Factory pays an annual dividend of $1.32 per share and has a dividend yield of 2.6%. Dine Brands Global pays an annual dividend of $2.52 per share and has a dividend yield of 2.8%. Cheesecake Factory pays out 50.8% of its earnings in the form of a dividend. Dine Brands Global pays out 60.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cheesecake Factory has increased its dividend for 5 consecutive years and Dine Brands Global has increased its dividend for 3 consecutive years.

Analyst Ratings

This is a summary of current ratings and price targets for Cheesecake Factory and Dine Brands Global, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cheesecake Factory 1 13 1 0 2.00
Dine Brands Global 0 1 2 0 2.67

Cheesecake Factory currently has a consensus target price of $52.64, indicating a potential upside of 4.60%. Dine Brands Global has a consensus target price of $111.50, indicating a potential upside of 22.87%. Given Dine Brands Global’s stronger consensus rating and higher probable upside, analysts plainly believe Dine Brands Global is more favorable than Cheesecake Factory.

Valuation & Earnings

This table compares Cheesecake Factory and Dine Brands Global’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cheesecake Factory $2.26 billion 1.02 $157.39 million $2.60 19.36
Dine Brands Global $604.82 million 2.66 -$330.53 million $4.15 21.87

Cheesecake Factory has higher revenue and earnings than Dine Brands Global. Cheesecake Factory is trading at a lower price-to-earnings ratio than Dine Brands Global, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Cheesecake Factory has a beta of 0.33, indicating that its stock price is 67% less volatile than the S&P 500. Comparatively, Dine Brands Global has a beta of -0.06, indicating that its stock price is 106% less volatile than the S&P 500.

Summary

Dine Brands Global beats Cheesecake Factory on 8 of the 15 factors compared between the two stocks.

Cheesecake Factory Company Profile

The Cheesecake Factory Incorporated operates restaurants in the United States. The company produces cheesecakes and other baked products for own restaurants and international licensees, as well as external foodservice operators, retailers, and distributors. As of August 21, 2018, it operated 215 company-owned restaurants, including 199 restaurants under The Cheesecake Factory brand; 14 restaurants under the Grand Lux Cafe brand; and 2 restaurants under the RockSugar Southeast Asian Kitchen brand, as well as 21 The Cheesecake Factory branded restaurants under licensing agreements internationally. The company was founded in 1972 and is headquartered in Calabasas, California.

Dine Brands Global Company Profile

Dine Brands Global, Inc., together with its subsidiaries, owns, franchises, operates, and rents full-service restaurants in the United States and internationally. It operates through four segments: Franchise Operations, Rental Operations, Company Restaurant Operations, and Financing Operations. The company owns and franchises two restaurant concepts, including Applebee's Neighborhood Grill & Bar (Applebee's) in the bar and grill segment of the casual dining category of the restaurant industry; and International House of Pancakes (IHOP) in the family dining category of the restaurant industry. Its Applebee's restaurants offer casual food, drinks, casual dining, and table services; and IHOP restaurants provide full table services, and food and beverage offerings. As of December 31, 2017, the company had 1,936 Applebee's franchised restaurants, and 1,786 IHOP franchised and area licensed restaurants. It is also involved in the lease or sublease of 693 IHOP franchised restaurants and 1 Applebee's franchised restaurant. The company was formerly known as DineEquity, Inc. and changed its name to Dine Brands Global, Inc. in February 2018. Dine Brands Global, Inc. was founded in 1958 and is headquartered in Glendale, California.

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