Analyzing Popeyes Louisiana Kitchen (PLKI) and Domino’s Pizza (DPZ)

Popeyes Louisiana Kitchen (NASDAQ: PLKI) and Domino’s Pizza (NYSE:DPZ) are both cyclical consumer goods & services companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Dividends

Domino’s Pizza pays an annual dividend of $1.84 per share and has a dividend yield of 0.9%. Popeyes Louisiana Kitchen does not pay a dividend. Domino’s Pizza pays out 36.7% of its earnings in the form of a dividend. Domino’s Pizza has increased its dividend for 3 consecutive years.

Profitability

This table compares Popeyes Louisiana Kitchen and Domino’s Pizza’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Popeyes Louisiana Kitchen 15.08% 490.51% 15.48%
Domino’s Pizza 9.40% -13.28% 34.03%

Analyst Ratings

This is a summary of current ratings for Popeyes Louisiana Kitchen and Domino’s Pizza, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Popeyes Louisiana Kitchen 1 4 1 0 2.00
Domino’s Pizza 0 10 10 0 2.50

Popeyes Louisiana Kitchen presently has a consensus price target of $69.75, indicating a potential downside of 11.68%. Domino’s Pizza has a consensus price target of $198.19, indicating a potential downside of 1.41%. Given Domino’s Pizza’s stronger consensus rating and higher possible upside, analysts clearly believe Domino’s Pizza is more favorable than Popeyes Louisiana Kitchen.

Valuation & Earnings

This table compares Popeyes Louisiana Kitchen and Domino’s Pizza’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Popeyes Louisiana Kitchen N/A N/A N/A $1.96 40.29
Domino’s Pizza $2.64 billion 3.67 $510.89 million $5.02 40.05

Domino’s Pizza has higher revenue and earnings than Popeyes Louisiana Kitchen. Domino’s Pizza is trading at a lower price-to-earnings ratio than Popeyes Louisiana Kitchen, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

97.6% of Popeyes Louisiana Kitchen shares are held by institutional investors. Comparatively, 94.2% of Domino’s Pizza shares are held by institutional investors. 2.2% of Popeyes Louisiana Kitchen shares are held by company insiders. Comparatively, 3.6% of Domino’s Pizza shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Popeyes Louisiana Kitchen has a beta of -0.11, suggesting that its share price is 111% less volatile than the S&P 500. Comparatively, Domino’s Pizza has a beta of 0.36, suggesting that its share price is 64% less volatile than the S&P 500.

Summary

Domino’s Pizza beats Popeyes Louisiana Kitchen on 10 of the 14 factors compared between the two stocks.

Popeyes Louisiana Kitchen Company Profile

Popeyes Louisiana Kitchen, Inc. (Popeyes) develops, operates and franchises quick-service restaurants (QSRs) under the trade names Popeyes Louisiana Kitchen and Popeyes Chicken & Biscuits. The Company conducts its operations through two segments: franchise operations and Company-operated restaurants. The Company-operated restaurant segment includes the operation of Company-owned restaurants. The franchise operations segment consists of domestic and international franchising activities. The Company’s Louisiana style menu features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. As of December 25, 2016, the Company operated and franchised 2,688 Popeyes restaurants in 48 states, the District of Columbia, three territories and 25 foreign countries. As of December 25, 2016, of the 55 Company-operated restaurants, approximately 84% were concentrated in Louisiana, North Carolina and Tennessee.

Domino’s Pizza Company Profile

Domino’s Pizza, Inc. is a pizza restaurant chain company. As of January 1, 2017, the Company operated in over 13,800 locations in over 85 markets around the world. The Company operates through three segments: domestic stores, international franchise and supply chain. Its basic menu features pizza products in various sizes and crust types. As of January 1, 2017, its Domestic Stores segment consisted primarily of its franchise operations, which consisted of 4,979 franchised stores located in the contiguous United States. As of January 1, 2017, its International Franchise segment consisted of a network of franchised stores in over 85 international markets. As of January 1, 2017, its supply chain segment operated 18 regional dough manufacturing and food supply chain centers in the United States, one thin crust manufacturing center, one vegetable processing center and one center providing equipment and supplies to certain of its domestic and international stores.

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