Comparing Accel Entertainment (NYSE:ACEL) & Wendy’s (NASDAQ:WEN)

Accel Entertainment (NYSE:ACEL) and Wendy’s (NASDAQ:WEN) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, dividends and valuation.

Analyst Recommendations

This is a summary of current ratings for Accel Entertainment and Wendy’s, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Accel Entertainment	0	3	4	0	2.57
Wendy’s	6	11	1	0	1.72

Accel Entertainment presently has a consensus target price of $14.60, suggesting a potential upside of 22.64%. Wendy’s has a consensus target price of $7.42, suggesting a potential upside of 2.23%. Given Accel Entertainment’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Accel Entertainment is more favorable than Wendy’s.

Profitability

This table compares Accel Entertainment and Wendy’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Accel Entertainment	4.08%	22.30%	5.59%
Wendy’s	5.72%	115.31%	2.70%

Insider and Institutional Ownership

55.4% of Accel Entertainment shares are held by institutional investors. Comparatively, 86.0% of Wendy’s shares are held by institutional investors. 14.5% of Accel Entertainment shares are held by insiders. Comparatively, 17.1% of Wendy’s shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Accel Entertainment and Wendy’s”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Accel Entertainment	$1.39 billion	0.69	$51.47 million	$0.67	17.77
Wendy’s	$2.20 billion	0.63	$165.07 million	$0.66	11.00

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

Volatility & Risk

Accel Entertainment has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500. Comparatively, Wendy’s has a beta of 0.4, indicating that its stock price is 60% less volatile than the S&P 500.

Summary

Accel Entertainment beats Wendy’s on 8 of the 14 factors compared between the two stocks.

About Accel Entertainment

Accel Entertainment, Inc., together with its subsidiaries, operates as a distributed gaming operator in the United States. It is involved in the installation, maintenance, and operation of gaming terminals; redemption devices that disburse winnings and contain automated teller machine (ATM) functionality; and other amusement devices in authorized non-casino locations, such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores. The company also provides gaming solutions to the location partners. In addition, it operates stand-alone ATMs in gaming and non-gaming locations, as well as amusement devices, including jukeboxes, dartboards, pool tables, and other related entertainment equipment. The company is headquartered in Burr Ridge, Illinois.

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.