Jack in the Box (NASDAQ: JACK) and Yum! Brands (NYSE:YUM) are both mid-cap cyclical consumer goods & services companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.

Dividends

Jack in the Box pays an annual dividend of $1.60 per share and has a dividend yield of 1.6%. Yum! Brands pays an annual dividend of $1.20 per share and has a dividend yield of 1.6%. Jack in the Box pays out 36.7% of its earnings in the form of a dividend. Yum! Brands pays out 33.1% 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. Yum! Brands has raised its dividend for 8 consecutive years.

Earnings and Valuation

This table compares Jack in the Box and Yum! Brands’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Jack in the Box $1.61 billion 1.79 $352.13 million $4.36 22.47
Yum! Brands $6.28 billion 4.19 $2.04 billion $3.62 21.07

Yum! Brands has higher revenue and earnings than Jack in the Box. Yum! Brands is trading at a lower price-to-earnings ratio than Jack in the Box, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Jack in the Box has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500. Comparatively, Yum! Brands has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.

Insider and Institutional Ownership

93.9% of Jack in the Box shares are held by institutional investors. Comparatively, 74.0% of Yum! Brands shares are held by institutional investors. 2.1% of Jack in the Box shares are held by company insiders. Comparatively, 0.7% of Yum! Brands shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Jack in the Box and Yum! Brands, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Jack in the Box 1 3 9 0 2.62
Yum! Brands 0 14 11 0 2.44

Jack in the Box presently has a consensus price target of $114.92, indicating a potential upside of 17.29%. Yum! Brands has a consensus price target of $77.38, indicating a potential upside of 1.44%. Given Jack in the Box’s stronger consensus rating and higher possible upside, equities analysts plainly believe Jack in the Box is more favorable than Yum! Brands.

Profitability

This table compares Jack in the Box and Yum! Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Jack in the Box 10.37% N/A 12.98%
Yum! Brands 16.76% -24.95% 18.16%

Summary

Yum! Brands beats Jack in the Box on 10 of the 17 factors compared between the two stocks.

About Jack in the Box

Jack in the Box Inc. operates and franchises Jack in the Box quick-service restaurants (QSRs) and Qdoba Mexican Eats (Qdoba) fast-casual restaurants. The Company operates in two segments: Jack in the Box and Qdoba restaurant operations. Qdoba is a fast-casual Mexican food brand in the United States, offering food items including burritos, tacos, salads, and quesadillas. Jack in the Box is a hamburger chain, which offers a selection of products, including classic burgers such as, Jumbo Jack burgers, and new product lines, such as Buttery Jack burgers, and its Brunchfast menu. As of October 2, 2016, the Company operated 2,954 Jack in the Box QSRs and Qdoba fast-casual restaurants. As of October 2, 2016, Jack in the Box system included 2,255restaurants, of which 417 were company-operated and 1,838 were franchise operated. As of October 2, 2016, the Qdoba system included 699 restaurants, of which 367 were company operated and 332 were franchise operated.

About Yum! Brands

YUM! Brands, Inc. is engaged in restaurant business. As of December 31, 2016, the Company operated or franchised over 43,500 restaurants in more than 135 countries and territories operating under the KFC, Pizza Hut or Taco Bell (collectively the Concepts) brands. The Company operates through three segments: The KFC Division, which includes the operations of the KFC concept around the world; The Pizza Hut Division, which includes the operations of the Pizza Hut concept around the world, and The Taco Bell Division, which includes the operations of the Taco Bell concept around the world. KFC restaurants across the world offer fried and non-fried chicken products, such as sandwiches, chicken strips, chicken-on-the-bone and other chicken products. Pizza Hut is a restaurant chain specialized in the sale of ready-to-eat pizza products. Taco Bell specializes in Mexican-style food products, including various types of tacos, burritos, quesadillas, salads, nachos and other related items.

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