Popeyes Louisiana Kitchen (NASDAQ: PLKI) and Del Taco Restaurants (NASDAQ:TACO) are both cyclical consumer goods & services companies, but which is the better business? We will compare the two companies based on the strength of their earnings, valuation, risk, institutional ownership, dividends, profitability and analyst recommendations.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Popeyes Louisiana Kitchen and Del Taco Restaurants, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Popeyes Louisiana Kitchen 1 4 1 0 2.00
Del Taco Restaurants 0 1 4 0 2.80

Popeyes Louisiana Kitchen currently has a consensus target price of $69.75, indicating a potential downside of 11.68%. Del Taco Restaurants has a consensus target price of $16.40, indicating a potential upside of 29.54%. Given Del Taco Restaurants’ stronger consensus rating and higher probable upside, analysts clearly believe Del Taco Restaurants is more favorable than Popeyes Louisiana Kitchen.

Profitability

This table compares Popeyes Louisiana Kitchen and Del Taco Restaurants’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Popeyes Louisiana Kitchen 15.08% 490.51% 15.48%
Del Taco Restaurants 4.78% 5.89% 3.08%

Institutional & Insider Ownership

97.6% of Popeyes Louisiana Kitchen shares are owned by institutional investors. Comparatively, 69.9% of Del Taco Restaurants shares are owned by institutional investors. 2.2% of Popeyes Louisiana Kitchen shares are owned by company insiders. Comparatively, 14.6% of Del Taco Restaurants shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk and Volatility

Popeyes Louisiana Kitchen has a beta of -0.11, suggesting that its stock price is 111% less volatile than the S&P 500. Comparatively, Del Taco Restaurants has a beta of -0.2, suggesting that its stock price is 120% less volatile than the S&P 500.

Valuation and Earnings

This table compares Popeyes Louisiana Kitchen and Del Taco Restaurants’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Popeyes Louisiana Kitchen N/A N/A N/A $1.96 40.29
Del Taco Restaurants $468.58 million 1.05 $67.62 million $0.56 22.61

Del Taco Restaurants has higher revenue and earnings than Popeyes Louisiana Kitchen. Del Taco Restaurants is trading at a lower price-to-earnings ratio than Popeyes Louisiana Kitchen, indicating that it is currently the more affordable of the two stocks.

Summary

Popeyes Louisiana Kitchen beats Del Taco Restaurants on 6 of the 11 factors compared between the two stocks.

Popeyes Louisiana Kitchen Company Profile

Popeyes Louisiana Kitchen, Inc. (Popeyes) develops, operates and franchises quick-service restaurants (QSRs) under the trade names Popeyes Louisiana Kitchen and Popeyes Chicken & Biscuits. The Company conducts its operations through two segments: franchise operations and Company-operated restaurants. The Company-operated restaurant segment includes the operation of Company-owned restaurants. The franchise operations segment consists of domestic and international franchising activities. The Company’s Louisiana style menu features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. As of December 25, 2016, the Company operated and franchised 2,688 Popeyes restaurants in 48 states, the District of Columbia, three territories and 25 foreign countries. As of December 25, 2016, of the 55 Company-operated restaurants, approximately 84% were concentrated in Louisiana, North Carolina and Tennessee.

Del Taco Restaurants Company Profile

Del Taco Restaurants, Inc. is an operator and franchisor of restaurants featuring made-to-order cuisine, including both Mexican inspired and American classic dishes. As of January 3, 2017, the Company operated 551 Del Taco restaurants. The Company’s menu offers a combination of Mexican-inspired food, such as tacos and burritos, and American classics, such as Double Del cheeseburgers, crinkle-cut fries and milkshakes. The Company’s menu features items, such as its Platos plated meals, Epic Burritos, Handcrafted Ensaladas and Fresca Bowls, as well as items on its Buck & Under Menu. As of January 3, 2017, the Company had 310 Company-operated and 241 franchise-operated restaurants. The Platos menu offering consists of individually plated meals complete with an entree, two sides, and chips and salsa. The Company’s menu also includes quesadillas, bowls and handcrafted ensaladas, as well as burgers and fries.

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