Analyzing El Pollo LoCo (LOCO) & Cheesecake Factory (CAKE)
El Pollo LoCo (NASDAQ: LOCO) and Cheesecake Factory (NASDAQ:CAKE) are both retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, earnings, risk and institutional ownership.
Insider & Institutional Ownership
78.9% of El Pollo LoCo shares are held by institutional investors. Comparatively, 97.6% of Cheesecake Factory shares are held by institutional investors. 45.9% of El Pollo LoCo shares are held by insiders. Comparatively, 8.4% of Cheesecake Factory shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares El Pollo LoCo and Cheesecake Factory’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|El Pollo LoCo||2.15%||9.00%||5.42%|
Cheesecake Factory pays an annual dividend of $1.16 per share and has a dividend yield of 2.5%. El Pollo LoCo does not pay a dividend. Cheesecake Factory pays out 35.3% of its earnings in the form of a dividend.
This is a summary of recent ratings for El Pollo LoCo and Cheesecake Factory, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|El Pollo LoCo||0||3||1||0||2.25|
El Pollo LoCo presently has a consensus price target of $12.25, suggesting a potential upside of 27.27%. Cheesecake Factory has a consensus price target of $47.88, suggesting a potential upside of 1.91%. Given El Pollo LoCo’s stronger consensus rating and higher probable upside, equities research analysts clearly believe El Pollo LoCo is more favorable than Cheesecake Factory.
Risk and Volatility
El Pollo LoCo has a beta of 0.33, indicating that its share price is 67% less volatile than the S&P 500. Comparatively, Cheesecake Factory has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500.
Earnings & Valuation
This table compares El Pollo LoCo and Cheesecake Factory’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|El Pollo LoCo||$401.70 million||0.93||$8.61 million||$0.21||45.83|
|Cheesecake Factory||$2.26 billion||0.95||$157.39 million||$3.29||14.28|
Cheesecake Factory has higher revenue and earnings than El Pollo LoCo. Cheesecake Factory is trading at a lower price-to-earnings ratio than El Pollo LoCo, indicating that it is currently the more affordable of the two stocks.
Cheesecake Factory beats El Pollo LoCo on 11 of the 16 factors compared between the two stocks.
About El Pollo LoCo
El Pollo Loco Holdings, Inc. specializes in fire-grilling citrus-marinated chicken and operates in the limited service restaurant (LSR) segment. The Company’s menu features its signature product, citrus-marinated fire-grilled chicken, and a range of Mexican-inspired entrees that it creates from chicken. Every day in every restaurant, the Company marinates and fire-grills its chicken over open flames, and hand-slices whole tomatoes, avocados, serrano peppers and cilantro to make its salsas, guacamole and cilantro dressings from scratch. The Company also offers burritos, salads, tostadas, bowls, stuffed quesadillas and chicken entrees. The Company’s entrees include Chicken Avocado Burrito, Under 500 Calorie entrees, Ultimate Pollo Bowl, and Stuffed Chicken Avocado Quesadilla. As of December 28, 2016, the Company had 460 restaurants, consisting of 201 Company-operated and 259 franchised restaurants. The Company also offers additional proteins, such as shrimp, carnitas and beef.
About Cheesecake Factory
The Cheesecake Factory Incorporated is engaged in the restaurant and bakery business. As of March 2, 2017, the Company operated 208 Company-owned restaurants: 194 under The Cheesecake Factory mark, 13 under the Grand Lux Cafe mark and one under the Rock Sugar Pan Asian Kitchen mark. The Company’s segments include The Cheesecake Factory restaurants, and other. It also operates bakery production facilities, which produce desserts for its restaurants, international licensees and third-party bakery customers. Its restaurants offer lunch and dinner, as well as Sunday brunch. Its restaurants also offer a bar. As of January 3, 2017, its menu consisted of over 200 items in addition to items presented on supplemental menus, such as its SkinnyLicious menu, which offers approximately 50 items. Its Grand Lux Cafe is a casual dining concept that offers artisan cuisine. It offers appetizers, seafood and steaks.
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