Financial Review: BJ's Restaurants (BJRI) versus Diplomat Pharmacy (DPLO)

BJ's Restaurants (NASDAQ: BJRI) and Diplomat Pharmacy (NYSE:DPLO) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, risk and institutional ownership.

Institutional & Insider Ownership

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94.6% of BJ's Restaurants shares are held by institutional investors. Comparatively, 64.6% of Diplomat Pharmacy shares are held by institutional investors. 6.8% of BJ's Restaurants shares are held by company insiders. Comparatively, 30.2% of Diplomat Pharmacy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

BJ's Restaurants has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500. Comparatively, Diplomat Pharmacy has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500.

Profitability

This table compares BJ's Restaurants and Diplomat Pharmacy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BJ's Restaurants 4.34% 12.07% 4.45%
Diplomat Pharmacy 0.35% 8.89% 4.47%

Earnings and Valuation

This table compares BJ's Restaurants and Diplomat Pharmacy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BJ's Restaurants $1.03 billion 0.86 $44.78 million $2.09 20.74
Diplomat Pharmacy $4.49 billion 0.33 $15.51 million $0.21 96.57

BJ's Restaurants has higher earnings, but lower revenue than Diplomat Pharmacy. BJ's Restaurants is trading at a lower price-to-earnings ratio than Diplomat Pharmacy, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for BJ's Restaurants and Diplomat Pharmacy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BJ's Restaurants 1 5 3 0 2.22
Diplomat Pharmacy 0 6 5 0 2.45

BJ's Restaurants currently has a consensus target price of $40.56, indicating a potential downside of 6.45%. Diplomat Pharmacy has a consensus target price of $25.50, indicating a potential upside of 25.74%. Given Diplomat Pharmacy’s stronger consensus rating and higher possible upside, analysts plainly believe Diplomat Pharmacy is more favorable than BJ's Restaurants.

Dividends

BJ's Restaurants pays an annual dividend of $0.22 per share and has a dividend yield of 0.5%. Diplomat Pharmacy does not pay a dividend. BJ's Restaurants pays out 10.5% of its earnings in the form of a dividend.

Summary

Diplomat Pharmacy beats BJ's Restaurants on 9 of the 16 factors compared between the two stocks.

About BJ's Restaurants

BJ’s Restaurants, Inc. owns and operates restaurants. The Company segment includes casual dining company-owned restaurants. Each of its restaurants is operated either as a BJ’s Restaurant & Brewhouse, a BJ’s Restaurant & Brewery, a BJ’s Pizza & Grill or a BJ’s Grill restaurant. The Company’s restaurants offer craft beers and other beers, as well as a selection of appetizers, entrees, pastas, burgers and sandwiches, specialty salads, and desserts, including its warm pizza cookie dessert, the Pizookie. As of February 27, 2017, the Company owned and operated 189 restaurants located in 24 states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia and Washington.

About Diplomat Pharmacy

Diplomat Pharmacy, Inc. (Diplomat) operates a specialty pharmacy business, which stocks, dispenses and distributes prescriptions for various biotechnology and specialty pharmaceutical manufacturers. The Company operates through specialty pharmacy services segment. The Company’s primary focus is on medication management programs for individuals with chronic diseases, including oncology, immunology, hepatitis, multiple sclerosis, specialty infusion therapy, and various other serious and/or long-term conditions. The Company provides specialty pharmacy support services to a national network of retailers and independent pharmacy groups, hospitals and health systems. The Company offers various services, such as specialty drug dispensing, retail specialty services, hospital and health system services, and hub services. The Company’s patient care system is used to coordinate and track patient adherence and safety.

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