Financial Survey: Boyd Gaming (NYSE:BYD) versus Texas Roadhouse (NASDAQ:TXRH)

Texas Roadhouse (NASDAQ:TXRH) and Boyd Gaming (NYSE:BYD) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Risk & Volatility

Texas Roadhouse has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500. Comparatively, Boyd Gaming has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.

Insider & Institutional Ownership

94.8% of Texas Roadhouse shares are owned by institutional investors. Comparatively, 76.8% of Boyd Gaming shares are owned by institutional investors. 0.5% of Texas Roadhouse shares are owned by company insiders. Comparatively, 22.8% of Boyd Gaming shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Texas Roadhouse pays an annual dividend of $3.00 per share and has a dividend yield of 1.9%. Boyd Gaming pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. Texas Roadhouse pays out 48.0% of its earnings in the form of a dividend. Boyd Gaming pays out 3.5% 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. Texas Roadhouse has increased its dividend for 6 consecutive years and Boyd Gaming has increased its dividend for 4 consecutive years. Texas Roadhouse is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Texas Roadhouse and Boyd Gaming’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Texas Roadhouse	6.63%	27.20%	11.75%
Boyd Gaming	44.34%	22.52%	8.80%

Analyst Recommendations

This is a summary of recent recommendations for Texas Roadhouse and Boyd Gaming, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Texas Roadhouse	0	12	10	1	2.52
Boyd Gaming	0	10	4	1	2.40

Texas Roadhouse currently has a consensus target price of $209.90, suggesting a potential upside of 31.40%. Boyd Gaming has a consensus target price of $94.69, suggesting a potential upside of 32.79%. Given Boyd Gaming’s higher probable upside, analysts clearly believe Boyd Gaming is more favorable than Texas Roadhouse.

Earnings and Valuation

This table compares Texas Roadhouse and Boyd Gaming”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Texas Roadhouse	$5.88 billion	1.78	$405.55 million	$6.25	25.56
Boyd Gaming	$4.09 billion	1.27	$1.84 billion	$22.72	3.14

Boyd Gaming has lower revenue, but higher earnings than Texas Roadhouse. Boyd Gaming is trading at a lower price-to-earnings ratio than Texas Roadhouse, indicating that it is currently the more affordable of the two stocks.

Summary

Texas Roadhouse beats Boyd Gaming on 10 of the 17 factors compared between the two stocks.

About Texas Roadhouse

Texas Roadhouse, Inc., together with its subsidiaries, operates casual dining restaurants in the United States and internationally. It also operates and franchises restaurants under the Texas Roadhouse, Bubba's 33, and Jaggers names in 49 states and ten internationally. Texas Roadhouse, Inc. was founded in 1993 and is based in Louisville, Kentucky.

About Boyd Gaming

Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, and Pennsylvania. The company operates through Las Vegas Locals, Downtown Las Vegas, Midwest & South, and Online segments. It also engages in owning and operating a travel agency. Boyd Gaming Corporation was founded in 1975 and is headquartered in Las Vegas, Nevada.