Wingstop (NASDAQ:WING) versus Tabcorp (OTCMKTS:TACBY) Critical Review

Wingstop (NASDAQ:WING) and Tabcorp (OTCMKTS:TACBY) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Profitability

This table compares Wingstop and Tabcorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wingstop	16.15%	-16.31%	18.05%
Tabcorp	N/A	N/A	N/A

Dividends

Wingstop pays an annual dividend of $1.32 per share and has a dividend yield of 1.2%. Tabcorp pays an annual dividend of $0.30 per share and has a dividend yield of 39.7%. Wingstop pays out 31.4% of its earnings in the form of a dividend. Tabcorp pays out 87.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Wingstop has increased its dividend for 7 consecutive years.

Valuation and Earnings

This table compares Wingstop and Tabcorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wingstop	$696.85 million	4.27	$174.27 million	$4.21	25.94
Tabcorp	N/A	N/A	N/A	$0.34	2.19

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Wingstop and Tabcorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wingstop	2	5	22	2	2.77
Tabcorp	0	0	0	0	0.00

Wingstop presently has a consensus target price of $241.81, indicating a potential upside of 121.42%. Given Wingstop’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Wingstop is more favorable than Tabcorp.

Insider & Institutional Ownership

0.0% of Tabcorp shares are owned by institutional investors. 0.5% of Wingstop shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Wingstop beats Tabcorp on 12 of the 15 factors compared between the two stocks.

About Wingstop

Wingstop Inc., together with its subsidiaries, franchises and operates restaurants under the Wingstop brand. Its restaurants offer classic wings, boneless wings, tenders, and hand-sauced-and-tossed in various flavors, as well as chicken sandwiches with fries and hand-cut carrots and celery that are cooked-to-order. The company was founded in 1994 and is headquartered in Addison, Texas.

About Tabcorp

Tabcorp Holdings Limited, together with its subsidiaries, provides gambling and entertainment services in Australia. It operates through Wagering and Media, and Gaming Services segments. The Wagering and Media segment offers through a network of TAB agencies, hotels and clubs, and on-course operations, as well as through retail, Internet, mobile devices, and phone. It also provides Trackside, a computer simulate racing product; and international wagering and pooling services. In addition, the company engages in the Sky Racing television channels broadcasting thoroughbred, and harness and greyhound racing to audiences; Sky Racing Active, a digital app providing Sky Racing's live and on-demand racing content across thoroughbred, and harness and greyhound racing; and Sky Sports Radio network. The Gaming Services segment offers electronic gaming machine (EGM) monitoring and related services; and provides MAX performance solutions, technical services, and integrated systems, as well as provides products, technology, financing, support, maintenance, and other gaming services. The company was founded in 1881 and is based in Melbourne, Australia.