Yum! Brands (NYSE: YUM) and Red Robin Gourmet Burgers (NASDAQ:RRGB) are both cyclical consumer goods & services companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, risk, earnings and institutional ownership.

Valuation & Earnings

This table compares Yum! Brands and Red Robin Gourmet Burgers’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Yum! Brands $6.37 billion 4.35 $1.62 billion $1.71 48.03
Red Robin Gourmet Burgers $1.30 billion 0.53 $11.72 million $0.96 55.73

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

Profitability

This table compares Yum! Brands and Red Robin Gourmet Burgers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yum! Brands 29.11% N/A 30.35%
Red Robin Gourmet Burgers 0.94% 7.32% 2.94%

Institutional & Insider Ownership

73.7% of Yum! Brands shares are owned by institutional investors. 0.7% of Yum! Brands shares are owned by insiders. Comparatively, 2.7% of Red Robin Gourmet Burgers shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Yum! Brands pays an annual dividend of $1.20 per share and has a dividend yield of 1.5%. Red Robin Gourmet Burgers does not pay a dividend. Yum! Brands pays out 70.2% of its earnings in the form of a dividend. Yum! Brands has increased its dividend for 8 consecutive years.

Analyst Ratings

This is a breakdown of current ratings for Yum! Brands and Red Robin Gourmet Burgers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yum! Brands 0 11 11 0 2.50
Red Robin Gourmet Burgers 0 6 5 0 2.45

Yum! Brands presently has a consensus price target of $80.40, indicating a potential downside of 2.11%. Red Robin Gourmet Burgers has a consensus price target of $68.60, indicating a potential upside of 28.22%. Given Red Robin Gourmet Burgers’ higher probable upside, analysts plainly believe Red Robin Gourmet Burgers is more favorable than Yum! Brands.

Volatility & Risk

Yum! Brands has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500. Comparatively, Red Robin Gourmet Burgers has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500.

Summary

Yum! Brands beats Red Robin Gourmet Burgers on 13 of the 17 factors compared between the two stocks.

Yum! Brands Company Profile

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.

Red Robin Gourmet Burgers Company Profile

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, primarily develops, operates, and franchises full-service restaurants in North America and focuses on serving selection of gourmet burgers. The Company’s menu features a line of gourmet burgers, which it makes from ground beef, as well as its line of Red’s Tavern Double Burgers and its Red Robin’s line of half-pound Angus beef burgers with various toppings. The Company also offers burgers made from chicken breasts, fish fillets, turkey patties, as well as vegetarian and vegan options. The Company offered a selection of buns, including ciabatta, gluten free, sesame, onion, whole grain, jalapeno and lettuce wraps a range of toppings, including fresh guacamole, house made barbeque sauces, aiolis, grilled pineapple, crispy onion straws, sauteed mushrooms, fried jalapenos, bruschetta salsa, coleslaw, eight different cheese choices and a fried egg, as of December 25, 2016.

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