Critical Comparison: Restaurant Brands International (NYSE:QSR) & Red Rock Resorts (NASDAQ:RRR)

Restaurant Brands International (NYSE:QSR) and Red Rock Resorts (NASDAQ:RRR) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their valuation, institutional ownership, analyst recommendations, risk, profitability, dividends and earnings.

Institutional & Insider Ownership

82.3% of Restaurant Brands International shares are owned by institutional investors. Comparatively, 47.8% of Red Rock Resorts shares are owned by institutional investors. 1.2% of Restaurant Brands International shares are owned by company insiders. Comparatively, 54.3% of Red Rock Resorts shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Restaurant Brands International and Red Rock Resorts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Restaurant Brands International	13.12%	33.43%	6.94%
Red Rock Resorts	8.43%	56.19%	4.01%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Restaurant Brands International and Red Rock Resorts, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Restaurant Brands International	0	7	16	0	2.70
Red Rock Resorts	0	4	16	1	2.86

Restaurant Brands International presently has a consensus price target of $84.04, indicating a potential upside of 16.79%. Red Rock Resorts has a consensus price target of $71.94, indicating a potential upside of 47.58%. Given Red Rock Resorts’ stronger consensus rating and higher probable upside, analysts plainly believe Red Rock Resorts is more favorable than Restaurant Brands International.

Valuation & Earnings

This table compares Restaurant Brands International and Red Rock Resorts”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Restaurant Brands International	$9.43 billion	2.66	$776.00 million	$3.72	19.34
Red Rock Resorts	$2.01 billion	2.55	$188.07 million	$2.83	17.23

Restaurant Brands International has higher revenue and earnings than Red Rock Resorts. Red Rock Resorts is trading at a lower price-to-earnings ratio than Restaurant Brands International, indicating that it is currently the more affordable of the two stocks.

Dividends

Restaurant Brands International pays an annual dividend of $2.60 per share and has a dividend yield of 3.6%. Red Rock Resorts pays an annual dividend of $1.04 per share and has a dividend yield of 2.1%. Restaurant Brands International pays out 69.9% of its earnings in the form of a dividend. Red Rock Resorts pays out 36.7% 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. Restaurant Brands International has raised its dividend for 10 consecutive years. Restaurant Brands International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Restaurant Brands International has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500. Comparatively, Red Rock Resorts has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500.

Summary

Restaurant Brands International beats Red Rock Resorts on 10 of the 17 factors compared between the two stocks.

About Restaurant Brands International

Restaurant Brands International Inc. operates as a quick-service restaurant company in Canada, the United States, and internationally. It operates through four segments: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK), and Firehouse Subs (FHS). The company owns and franchises TH chain of donut/coffee/tea restaurants that offer blend coffee, tea, and espresso-based hot and cold specialty drinks; and fresh baked goods, including donuts, Timbits, bagels, muffins, cookies and pastries, grilled paninis, classic sandwiches, wraps, soups, and other food products. It is also involved in owning and franchising BK, a fast-food hamburger restaurant chain, which offers flame-grilled hamburgers, chicken and other specialty sandwiches, French fries, soft drinks, and other food items; and PLK quick service restaurants that provide Louisiana-style fried chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. In addition, the company owns and franchises FHS quick service restaurants that offer meats and cheese, chopped salads, chili and soups, signature and other sides, soft drinks, and local specialties. The company was founded in 1954 and is headquartered in Toronto, Canada.

About Red Rock Resorts

Red Rock Resorts, Inc., through its interest in Station Casinos LLC, develops and operates casino and entertainment properties in the United States. The company owns and operates gaming and entertainment facilities, including Durango Casino & Resort and smaller casinos in the Las Vegas regional market. The company was formerly known as Station Casinos Corp. and changed its name to Red Rock Resorts, Inc. in January 2016. Red Rock Resorts, Inc. was founded in 1976 and is based in Las Vegas, Nevada.