Darden Restaurants (NYSE:DRI) and Famous Dave’s of America (NASDAQ:DAVE) are both retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, risk, earnings and dividends.

Insider & Institutional Ownership

89.6% of Darden Restaurants shares are held by institutional investors. Comparatively, 53.0% of Famous Dave’s of America shares are held by institutional investors. 0.7% of Darden Restaurants shares are held by company insiders. Comparatively, 23.6% of Famous Dave’s of America shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Darden Restaurants and Famous Dave’s of America, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Darden Restaurants 1 6 20 0 2.70
Famous Dave’s of America 0 0 0 0 N/A

Darden Restaurants currently has a consensus price target of $126.74, suggesting a potential upside of 7.92%. Given Darden Restaurants’ higher possible upside, analysts clearly believe Darden Restaurants is more favorable than Famous Dave’s of America.

Volatility & Risk

Darden Restaurants has a beta of 0.3, indicating that its stock price is 70% less volatile than the S&P 500. Comparatively, Famous Dave’s of America has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500.

Earnings & Valuation

This table compares Darden Restaurants and Famous Dave’s of America’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Darden Restaurants $8.08 billion 1.80 $596.00 million $4.81 24.42
Famous Dave’s of America $54.89 million 1.00 $4.86 million N/A N/A

Darden Restaurants has higher revenue and earnings than Famous Dave’s of America.

Profitability

This table compares Darden Restaurants and Famous Dave’s of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Darden Restaurants 8.08% 30.28% 12.32%
Famous Dave’s of America 8.86% 26.14% 13.41%

Dividends

Darden Restaurants pays an annual dividend of $0.63 per share and has a dividend yield of 0.5%. Famous Dave’s of America does not pay a dividend. Darden Restaurants pays out 13.1% of its earnings in the form of a dividend. Darden Restaurants has increased its dividend for 2 consecutive years.

Summary

Darden Restaurants beats Famous Dave’s of America on 10 of the 15 factors compared between the two stocks.

About Darden Restaurants

Darden Restaurants, Inc., through its subsidiaries, owns and operates full-service restaurants in the United States and Canada. As of May 27, 2018, it owned and operated approximately 1,746 restaurants under the Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Bahama Breeze, Seasons 52, and Eddie V's brands. The company was founded in 1968 and is based in Orlando, Florida.

About Famous Dave’s of America

Famous Dave's of America, Inc. develops, owns, operates, and franchises barbeque restaurants under the Famous Dave's name. It offers smoked, barbequed, and grilled meats, as well as entrée items and delicious side dishes that are prepared using prepared proprietary seasonings, sauces, and mixes. The company operates full-service and counter-service restaurants. As of March 5, 2018, it owned 16 locations and franchised 135 restaurants in 32 states, the Commonwealth of Puerto Rico, Canada, and the United Arab Emirates. Famous Dave's of America, Inc. was founded in 1994 and is headquartered in Minnetonka, Minnesota.

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