Wendy’s (NASDAQ:WEN) vs. Papa John’s International (NASDAQ:PZZA) Head-To-Head Analysis

Wendy’s (NASDAQ:WEN) and Papa John’s International (NASDAQ:PZZA) are both small-cap consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, dividends, analyst recommendations, profitability, risk, institutional ownership and valuation.

Profitability

This table compares Wendy’s and Papa John’s International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wendy’s	4.40%	93.77%	2.28%
Papa John’s International	1.31%	-9.65%	5.21%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Wendy’s and Papa John’s International, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wendy’s	6	10	1	0	1.71
Papa John’s International	2	7	0	0	1.78

Wendy’s currently has a consensus target price of $7.56, indicating a potential downside of 9.32%. Papa John’s International has a consensus target price of $28.57, indicating a potential upside of 48.89%. Given Papa John’s International’s stronger consensus rating and higher probable upside, analysts plainly believe Papa John’s International is more favorable than Wendy’s.

Earnings and Valuation

This table compares Wendy’s and Papa John’s International”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wendy’s	$2.18 billion	0.73	$165.07 million	$0.51	16.35
Papa John’s International	$2.05 billion	0.31	$30.53 million	$0.75	25.59

Wendy’s has higher revenue and earnings than Papa John’s International. Wendy’s is trading at a lower price-to-earnings ratio than Papa John’s International, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

86.0% of Wendy’s shares are held by institutional investors. 17.1% of Wendy’s shares are held by company insiders. Comparatively, 1.8% of Papa John’s International 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.

Volatility and Risk

Wendy’s has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500. Comparatively, Papa John’s International has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500.

Summary

Wendy’s beats Papa John’s International on 9 of the 14 factors compared between the two stocks.

About Wendy’s

The Wendy’s Company operates and franchises quick-service restaurants under the Wendy’s name. Founded by Dave Thomas in Columbus, Ohio, in 1969, the chain is known for hamburgers made with fresh, never-frozen beef in the United States, along with chicken sandwiches, nuggets, fries, salads and its signature Frosty dessert. Wendy’s restaurants also offer breakfast items and a range of beverages. The company serves customers in the United States and international markets through a mix of company-operated and franchised locations.

About Papa John’s International

Papa John’s International, Inc. operates and franchises pizza restaurants under the Papa Johns brand. Its restaurants offer pizza alongside sides, desserts and beverages, with ordering options that include delivery and carryout. The company was founded in 1984 by John Schnatter, who opened its first restaurant in Jeffersonville, Indiana. Papa Johns has since expanded across the United States and into international markets, serving customers through company-owned restaurants and franchised locations.