Yum! Brands (NYSE: DIN) and Dine Brands Global (NYSE:DIN) are both retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Volatility & Risk

Yum! Brands has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500. Comparatively, Dine Brands Global has a beta of 0.06, suggesting that its share price is 94% less volatile than the S&P 500.

Dividends

Yum! Brands pays an annual dividend of $1.44 per share and has a dividend yield of 1.6%. Dine Brands Global pays an annual dividend of $2.52 per share and has a dividend yield of 3.1%. Yum! Brands pays out 48.6% of its earnings in the form of a dividend. Dine Brands Global pays out 60.7% 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. Dine Brands Global has increased its dividend for 3 consecutive years. Dine Brands Global is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

71.4% of Yum! Brands shares are held by institutional investors. Comparatively, 97.1% of Dine Brands Global shares are held by institutional investors. 0.6% of Yum! Brands shares are held by company insiders. Comparatively, 2.8% of Dine Brands Global 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.

Profitability

This table compares Yum! Brands and Dine Brands Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yum! Brands 27.95% -17.36% 23.05%
Dine Brands Global -50.50% -35.19% 4.23%

Earnings & Valuation

This table compares Yum! Brands and Dine Brands Global’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Yum! Brands $5.88 billion 4.83 $1.34 billion $2.96 30.25
Dine Brands Global $604.82 million 2.37 -$330.53 million $4.15 19.54

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Yum! Brands and Dine Brands Global, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yum! Brands 0 10 10 0 2.50
Dine Brands Global 0 1 2 0 2.67

Yum! Brands presently has a consensus price target of $86.31, indicating a potential downside of 3.59%. Dine Brands Global has a consensus price target of $104.50, indicating a potential upside of 28.85%. Given Dine Brands Global’s stronger consensus rating and higher probable upside, analysts plainly believe Dine Brands Global is more favorable than Yum! Brands.

Summary

Yum! Brands beats Dine Brands Global on 10 of the 17 factors compared between the two stocks.

About Yum! Brands

YUM! Brands, Inc., together with its subsidiaries, develops, operates, and franchises quick service restaurants worldwide. It operates in three segments: the KFC Division, the Pizza Hut Division, and the Taco Bell Division. The company operates restaurants under the KFC, Pizza Hut, and Taco Bell brands, which specialize in chicken, pizza, and Mexican-style food categories. As of December 31, 2017, it had 21,487 KFC units; 16,748 Pizza Hut units; and 6,849 Taco Bell units. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in May 2002. YUM! Brands, Inc. was founded in 1997 and is headquartered in Louisville, Kentucky.

About Dine Brands Global

Dine Brands Global, Inc. owns and franchises casual and family dining restaurants. It operates through four segments: Franchise Operations, Rental operations, Company Restaurant Operations, and Financing Operations. The Franchise Operations segment comprises of royalties, fees, and other income for Applebee’s and IHOP franchised and area licensed restaurants. The Rental Operations segment covers rental income derived from lease or sublease agreements covering IHOP and Applebee’s franchised restaurants. The Company Restaurant Operations includes retail sales from IHOP company-operated restaurants. The Financing Operations segment is in charge of interest income from receivables for equipment leases and franchise fee notes generally associated with IHOP franchised restaurants developed before 2003. The company was founded by Jerry Lapin, Al Lapin, Jr. and Albert Kallis on July 7, 1958 and is headquartered in Glendale, CA.

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