Comparing Texas Roadhouse (NASDAQ:TXRH) and Planet Fitness (NYSE:PLNT)

Planet Fitness (NYSE:PLNT) and Texas Roadhouse (NASDAQ:TXRH) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.

Profitability

This table compares Planet Fitness and Texas Roadhouse’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Planet Fitness	16.88%	-59.46%	8.60%
Texas Roadhouse	6.63%	27.20%	11.75%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Planet Fitness and Texas Roadhouse, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Planet Fitness	1	9	11	1	2.55
Texas Roadhouse	0	12	10	1	2.52

Planet Fitness currently has a consensus target price of $70.24, indicating a potential upside of 72.25%. Texas Roadhouse has a consensus target price of $209.40, indicating a potential upside of 29.62%. Given Planet Fitness’ stronger consensus rating and higher possible upside, research analysts plainly believe Planet Fitness is more favorable than Texas Roadhouse.

Valuation and Earnings

This table compares Planet Fitness and Texas Roadhouse”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Planet Fitness	$1.32 billion	2.33	$219.10 million	$2.95	13.82
Texas Roadhouse	$5.88 billion	1.80	$405.55 million	$6.25	25.85

Texas Roadhouse has higher revenue and earnings than Planet Fitness. Planet Fitness is trading at a lower price-to-earnings ratio than Texas Roadhouse, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

95.5% of Planet Fitness shares are held by institutional investors. Comparatively, 94.8% of Texas Roadhouse shares are held by institutional investors. 0.9% of Planet Fitness shares are held by company insiders. Comparatively, 0.5% of Texas Roadhouse shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility & Risk

Planet Fitness has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500. Comparatively, Texas Roadhouse has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Summary

Planet Fitness beats Texas Roadhouse on 8 of the 14 factors compared between the two stocks.

About Planet Fitness

Planet Fitness, Inc., together with its subsidiaries, franchises and operates fitness centers under the Planet Fitness brand. The company operates through three segments: Franchise, Corporate-Owned Stores, and Equipment. The company is involved in franchising business in the United States, Puerto Rico, Canada, Panama, Mexico, and Australia. It engages in the sale of fitness equipment to franchisee-owned stores in the United States, Canada, and Mexico. In addition, the company operates corporate-owned stores in the United States and Canada. Planet Fitness, Inc. was founded in 1992 and is headquartered in Hampton, New Hampshire.

About Texas Roadhouse

Texas Roadhouse, Inc., together with its subsidiaries, operates casual dining restaurants in the United States and internationally. It also operates and franchises restaurants under the Texas Roadhouse, Bubba's 33, and Jaggers names in 49 states and ten internationally. Texas Roadhouse, Inc. was founded in 1993 and is based in Louisville, Kentucky.