BJ’s Restaurants (NASDAQ:BJRI) versus Wendy’s (NASDAQ:WEN) Financial Contrast

Wendy’s (NASDAQ:WEN) and BJ’s Restaurants (NASDAQ:BJRI) are both small-cap retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Risk & Volatility

Wendy’s has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500. Comparatively, BJ’s Restaurants has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Wendy’s and BJ’s Restaurants, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wendy’s	5	16	4	1	2.04
BJ’s Restaurants	2	4	3	0	2.11

Wendy’s presently has a consensus target price of $10.30, indicating a potential upside of 22.13%. BJ’s Restaurants has a consensus target price of $41.43, indicating a potential downside of 5.41%. Given Wendy’s’ higher possible upside, research analysts clearly believe Wendy’s is more favorable than BJ’s Restaurants.

Institutional & Insider Ownership

86.0% of Wendy’s shares are held by institutional investors. Comparatively, 100.0% of BJ’s Restaurants shares are held by institutional investors. 17.0% of Wendy’s shares are held by company insiders. Comparatively, 4.3% of BJ’s Restaurants shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Wendy’s and BJ’s Restaurants’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wendy’s	8.43%	125.74%	3.88%
BJ’s Restaurants	2.23%	12.92%	4.67%

Valuation & Earnings

This table compares Wendy’s and BJ’s Restaurants”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wendy’s	$2.25 billion	0.71	$194.36 million	$0.94	8.97
BJ’s Restaurants	$1.36 billion	0.68	$16.69 million	$1.34	32.69

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

Summary

Wendy’s beats BJ’s Restaurants on 9 of the 15 factors compared between the two stocks.

About Wendy’s

The Wendy’s Co. engages in operating, developing, and franchising a system of quick-service restaurants. It operates through the following segments: Wendy’s U.S., Wendy’s International, and Global Real Estate and Development. The Wendy’s U.S. segment includes the operation and franchising of Wendy’s restaurants in the U.S. The Wendy’s International segment is involved in the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. The Global Real Estate and Development segment focuses on real estate activity for owned sites and sites leased from third parties. The company was founded by R. David Thomas on November 15, 1969 and is headquartered in Dublin, OH.

About BJ’s Restaurants

BJ’s Restaurants, Inc. owns and operates casual dining restaurants in the United States. Its restaurants offer pizzas, craft and other beers, appetizers, entrées, pastas, sandwiches, specialty salads, and desserts under brand name Pizookie. The company was formerly known as Chicago Pizza & Brewery, Inc. and changed its name to BJ’s Restaurants, Inc. in August 2004. BJ’s Restaurants, Inc. was founded in 1978 and is based in Huntington Beach, California.