Critical Analysis: Darden Restaurants (NYSE:DRI) & Dutch Bros (NYSE:BROS)

Darden Restaurants (NYSE:DRI) and Dutch Bros (NYSE:BROS) are both large-cap retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their earnings, valuation, risk, institutional ownership, dividends, profitability and analyst recommendations.

Risk and Volatility

Darden Restaurants has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500. Comparatively, Dutch Bros has a beta of 2.55, suggesting that its stock price is 155% more volatile than the S&P 500.

Profitability

This table compares Darden Restaurants and Dutch Bros’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Darden Restaurants	8.92%	52.44%	9.10%
Dutch Bros	4.04%	8.91%	2.64%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Darden Restaurants and Dutch Bros, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Darden Restaurants	0	12	19	0	2.61
Dutch Bros	0	4	17	3	2.96

Darden Restaurants currently has a consensus target price of $223.75, indicating a potential upside of 19.58%. Dutch Bros has a consensus target price of $76.68, indicating a potential upside of 23.38%. Given Dutch Bros’ stronger consensus rating and higher probable upside, analysts clearly believe Dutch Bros is more favorable than Darden Restaurants.

Earnings and Valuation

This table compares Darden Restaurants and Dutch Bros”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Darden Restaurants	$12.58 billion	1.73	$1.05 billion	$9.54	19.61
Dutch Bros	$1.54 billion	6.65	$35.26 million	$0.50	124.31

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

Institutional & Insider Ownership

93.6% of Darden Restaurants shares are owned by institutional investors. Comparatively, 85.5% of Dutch Bros shares are owned by institutional investors. 0.5% of Darden Restaurants shares are owned by company insiders. Comparatively, 42.4% of Dutch Bros shares are owned by company 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.

Summary

Darden Restaurants beats Dutch Bros on 8 of the 15 factors compared between the two stocks.

About Darden Restaurants

Darden Restaurants, Inc., together with its subsidiaries, owns and operates full-service restaurants in the United States and Canada. It operates under Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s Prime Seafood, and Capital Burger brand names. Darden Restaurants, Inc. was incorporated in 1995 and is based in Orlando, Florida.

About Dutch Bros

Dutch Bros Inc., together with its subsidiaries, operates and franchises drive-thru shops in the United States. The company operates through Company-Operated Shops and Franchising and Other segments. It serves through company-operated shops and online channels under Dutch Bros; Dutch Bros Coffee; Dutch Bros Rebel; Dutch Bros; and Blue Rebel brands. Dutch Bros Inc. was founded in 1992 and is headquartered in Grants Pass, Oregon.