Wingstop (NASDAQ: WING) and Popeyes Louisiana Kitchen (NASDAQ:PLKI) are both retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, earnings, profitability, institutional ownership, risk and dividends.

Valuation and Earnings

This table compares Wingstop and Popeyes Louisiana Kitchen’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Wingstop $97.80 million 9.63 $35.13 million $0.64 50.64
Popeyes Louisiana Kitchen N/A N/A N/A $1.96 40.29

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

Risk & Volatility

Wingstop has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, Popeyes Louisiana Kitchen has a beta of -0.11, suggesting that its stock price is 111% less volatile than the S&P 500.

Insider and Institutional Ownership

97.6% of Popeyes Louisiana Kitchen shares are owned by institutional investors. 1.8% of Wingstop shares are owned by company insiders. Comparatively, 2.2% of Popeyes Louisiana Kitchen shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Wingstop and Popeyes Louisiana Kitchen, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Wingstop 0 2 6 1 2.89
Popeyes Louisiana Kitchen 1 4 1 0 2.00

Wingstop presently has a consensus price target of $34.56, suggesting a potential upside of 6.62%. Popeyes Louisiana Kitchen has a consensus price target of $69.75, suggesting a potential downside of 11.68%. Given Wingstop’s stronger consensus rating and higher possible upside, analysts plainly believe Wingstop is more favorable than Popeyes Louisiana Kitchen.

Profitability

This table compares Wingstop and Popeyes Louisiana Kitchen’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Wingstop 19.28% -28.04% 17.56%
Popeyes Louisiana Kitchen 15.08% 490.51% 15.48%

Summary

Wingstop beats Popeyes Louisiana Kitchen on 8 of the 12 factors compared between the two stocks.

Wingstop Company Profile

Wingstop Inc. is franchisor and operator of restaurants that specializes in cooked-to-order, hand-sauced and tossed chicken wings. The Company operates through two segments: Franchise and Company. As of December 31, 2016, the Company offers its guests 11 flavors on bone-in and boneless chicken wings paired with hand-cut, seasoned fries and sides. It is a casual chicken wings-focused restaurant chain with various concepts, which include wings as add-on menu items or focus on wings in a bar or sports-centric setting. The flavors include Atomic, Mango Habanero, Cajun, Original Hot, Louisiana Rub, Mild, Hickory Smoked BBQ, Lemon Pepper, Garlic Parmesan, Hawaiian and Teriyaki. It offers various order options, including eat-in, to go, individual, combo meals and family packs. The Company maintains Website hosting, and manages the development and maintenance of the mobile Wingstop application. It markets Wingstop products, services and restaurants through the Website, www.wingstop.com.

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.

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