Financial Review: BJ’s Restaurants (NASDAQ:BJRI) & Yum! Brands (NASDAQ:YUM)

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BJ’s Restaurants (NASDAQ:BJRI) and Yum! Brands (NYSE:YUM) are both retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, dividends, risk and institutional ownership.

Dividends

BJ’s Restaurants pays an annual dividend of $0.52 per share and has a dividend yield of 1.2%. Yum! Brands pays an annual dividend of $1.68 per share and has a dividend yield of 1.6%. BJ’s Restaurants pays out 22.1% of its earnings in the form of a dividend. Yum! Brands pays out 47.3% 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. BJ’s Restaurants has raised its dividend for 2 consecutive years and Yum! Brands has raised its dividend for 2 consecutive years.

Analyst Recommendations

This is a summary of current ratings for BJ’s Restaurants and Yum! Brands, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BJ’s Restaurants 1 5 9 0 2.53
Yum! Brands 1 16 5 0 2.18

BJ’s Restaurants presently has a consensus target price of $45.53, suggesting a potential upside of 8.23%. Yum! Brands has a consensus target price of $111.39, suggesting a potential upside of 5.80%. Given BJ’s Restaurants’ stronger consensus rating and higher probable upside, equities research analysts clearly believe BJ’s Restaurants is more favorable than Yum! Brands.

Insider & Institutional Ownership

98.4% of BJ’s Restaurants shares are held by institutional investors. Comparatively, 75.3% of Yum! Brands shares are held by institutional investors. 2.3% of BJ’s Restaurants shares are held by insiders. Comparatively, 0.7% of Yum! Brands shares are held by 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.

Valuation and Earnings

This table compares BJ’s Restaurants and Yum! Brands’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BJ’s Restaurants $1.12 billion 0.72 $50.81 million $2.35 17.90
Yum! Brands $5.60 billion 5.69 $1.29 billion $3.55 29.66

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

Volatility & Risk

BJ’s Restaurants has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500. Comparatively, Yum! Brands has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
BJ’s Restaurants 3.60% 13.38% 4.32%
Yum! Brands 23.12% -13.90% 22.65%

BJ’s Restaurants Company Profile

BJ's Restaurants, Inc. owns and operates casual dining restaurants in the United States. Its restaurants offer pizzas, craft and other beers, appetizers, entrées, pastas, sandwiches, specialty salads, and desserts. As of April 16, 2019, the company owned and operated 204 casual dining restaurants that offer dine-in, take-out, delivery, and party catering services in 27 states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, and Washington. BJ's Restaurants, Inc. was founded in 1978 and is based in Huntington Beach, California.

Yum! Brands Company Profile

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, 2018, it had 22,621 KFC units; 18,431 Pizza Hut units; and 7,072 Taco Bell units in approximately 140 countries and territories. 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 incorporated in 1997 and is headquartered in Louisville, Kentucky.

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