Expedia Group (NASDAQ:EXPE) & Cheesecake Factory (NASDAQ:CAKE) Critical Contrast

Cheesecake Factory (NASDAQ:CAKE) and Expedia Group (NASDAQ:EXPE) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.

Dividends

Cheesecake Factory pays an annual dividend of $1.20 per share and has a dividend yield of 1.1%. Expedia Group pays an annual dividend of $1.92 per share and has a dividend yield of 0.7%. Cheesecake Factory pays out 32.5% of its earnings in the form of a dividend. Expedia Group pays out 12.0% 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.

Profitability

This table compares Cheesecake Factory and Expedia Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cheesecake Factory	4.61%	43.97%	6.18%
Expedia Group	12.97%	87.32%	7.85%

Analyst Ratings

This is a summary of current recommendations and price targets for Cheesecake Factory and Expedia Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cheesecake Factory	2	10	5	1	2.28
Expedia Group	1	21	18	0	2.42

Cheesecake Factory presently has a consensus target price of $85.47, suggesting a potential downside of 22.06%. Expedia Group has a consensus target price of $316.18, suggesting a potential upside of 19.31%. Given Expedia Group’s stronger consensus rating and higher probable upside, analysts plainly believe Expedia Group is more favorable than Cheesecake Factory.

Valuation & Earnings

This table compares Cheesecake Factory and Expedia Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cheesecake Factory	$3.75 billion	1.45	$148.43 million	$3.69	29.72
Expedia Group	$14.73 billion	2.16	$1.29 billion	$16.04	16.52

Expedia Group has higher revenue and earnings than Cheesecake Factory. Expedia Group is trading at a lower price-to-earnings ratio than Cheesecake Factory, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

94.5% of Cheesecake Factory shares are owned by institutional investors. Comparatively, 90.8% of Expedia Group shares are owned by institutional investors. 8.0% of Cheesecake Factory shares are owned by company insiders. Comparatively, 5.2% of Expedia Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

Cheesecake Factory has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500. Comparatively, Expedia Group has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500.

Summary

Expedia Group beats Cheesecake Factory on 12 of the 17 factors compared between the two stocks.

About Cheesecake Factory

The Cheesecake Factory Incorporated operates and licenses restaurants in the United States and Canada. The company operates bakeries that produce cheesecakes and other baked products for its restaurants, international licensees, third-party bakery customers, external foodservice operators, retailers, and distributors. It operates restaurants under the brands comprising The Cheesecake Factory, North Italia, Flower Child, Fox Restaurant Concepts. The Cheesecake Factory Incorporated was founded in 1972 and is headquartered in Calabasas, California.

About Expedia Group

Expedia Group, Inc. operates as an online travel company in the United States and internationally. The company operates through B2C, B2B, and trivago segments. Its B2C segment includes Brand Expedia, a full-service online travel brand offers various travel products and services; Hotels.com for lodging accommodations; Vrbo, an online marketplace for the alternative accommodations; Orbitz, Travelocity, Wotif Group, ebookers, CheapTickets, Hotwire.com and CarRentals.com. The company's B2B segment provides various travel and non-travel companies including airlines, offline travel agents, online retailers, corporate travel management, and financial institutions who leverage its travel technology and tap into its diverse supply to augment their offerings and market Expedia Group rates and availabilities to its travelers. Its trivago segment, a hotel metasearch website, which send referrals to online travel companies and travel service providers from hotel metasearch websites. In addition, the company provides brand advertising through online and offline channels, loyalty programs, mobile apps, and search engine marketing, as well as metasearch, social media, direct and personalized traveler communications on its websites, and through direct e-mail communication with its travelers. The company was formerly known as Expedia, Inc. and changed its name to Expedia Group, Inc. in March 2018. Expedia Group, Inc. was founded in 1996 and is headquartered in Seattle, Washington.