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

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Texas Roadhouse and Planet Fitness, as provided by MarketBeat.com.

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

Texas Roadhouse presently has a consensus target price of $209.40, suggesting a potential upside of 24.97%. Planet Fitness has a consensus target price of $70.24, suggesting a potential upside of 41.95%. Given Planet Fitness’ stronger consensus rating and higher possible upside, analysts clearly believe Planet Fitness is more favorable than Texas Roadhouse.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Texas Roadhouse	$5.88 billion	1.87	$405.55 million	$6.25	26.81
Planet Fitness	$1.32 billion	2.82	$219.10 million	$2.95	16.77

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.

Volatility and Risk

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

Insider & Institutional Ownership

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

Profitability

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

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

Summary

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

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.

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.