Critical Analysis: Pinstripes (NYSE:PNST) and Wendy’s (NASDAQ:WEN)

Wendy’s (NASDAQ:WEN) and Pinstripes (NYSE:PNST) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, profitability, institutional ownership, dividends and risk.

Analyst Recommendations

This is a summary of current recommendations and price targets for Wendy’s and Pinstripes, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wendy’s	0	13	4	0	2.24
Pinstripes	0	0	3	0	3.00

Wendy’s presently has a consensus price target of $22.60, indicating a potential upside of 13.34%. Pinstripes has a consensus price target of $6.00, indicating a potential upside of 110.53%. Given Pinstripes’ stronger consensus rating and higher probable upside, analysts clearly believe Pinstripes is more favorable than Wendy’s.

Institutional & Insider Ownership

86.0% of Wendy’s shares are owned by institutional investors. Comparatively, 56.8% of Pinstripes shares are owned by institutional investors. 17.1% of Wendy’s shares are owned by insiders. Comparatively, 22.8% of Pinstripes shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Wendy’s and Pinstripes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wendy’s	9.37%	56.24%	3.87%
Pinstripes	N/A	N/A	-8.99%

Volatility and Risk

Wendy’s has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500. Comparatively, Pinstripes has a beta of -0.1, suggesting that its share price is 110% less volatile than the S&P 500.

Valuation & Earnings

This table compares Wendy’s and Pinstripes’ gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wendy’s	$2.18 billion	1.88	$204.44 million	$0.98	20.35
Pinstripes	N/A	N/A	N/A	N/A	N/A

Wendy’s has higher revenue and earnings than Pinstripes.

Summary

Wendy’s beats Pinstripes on 7 of the 10 factors compared between the two stocks.

About Wendy’s

The Wendy's Company, together with its subsidiaries, operates as a quick-service restaurant company in the United States and internationally. It operates through Wendy's U.S., Wendy's International, and Global Real Estate & Development segments. The company is involved in operating, developing, and franchising a system of quick-service restaurants specializing in hamburger sandwiches. It owns and leases real estate properties. The company was formerly known as Wendy's/Arby's Group, Inc. and changed its name to The Wendy's Company in July 2011. The Wendy's Company was founded in 1969 and is headquartered in Dublin, Ohio.

About Pinstripes

Pinstripes Holdings Inc. operates a dining and entertainment concept restaurants. The company provides Italian-American food and beverage menu with bowling, bocce, and event space. It also offers private event options and catering services. The company is based in Northbrook, Illinois.