Cheesecake Factory (NASDAQ:CAKE) and Papa John’s Int’l (NASDAQ:PZZA) are both retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, profitability, valuation, dividends and risk.
Cheesecake Factory pays an annual dividend of $1.32 per share and has a dividend yield of 2.9%. Papa John’s Int’l pays an annual dividend of $0.90 per share and has a dividend yield of 1.8%. Cheesecake Factory pays out 54.3% of its earnings in the form of a dividend. Papa John’s Int’l pays out 67.2% 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. Cheesecake Factory has raised its dividend for 6 consecutive years and Papa John’s Int’l has raised its dividend for 5 consecutive years. Cheesecake Factory is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
98.3% of Cheesecake Factory shares are owned by institutional investors. Comparatively, 94.2% of Papa John’s Int’l shares are owned by institutional investors. 8.5% of Cheesecake Factory shares are owned by company insiders. Comparatively, 43.0% of Papa John’s Int’l shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
This is a summary of current ratings and target prices for Cheesecake Factory and Papa John’s Int’l, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Papa John’s Int’l||0||1||5||0||2.83|
Cheesecake Factory currently has a consensus target price of $52.67, suggesting a potential upside of 16.16%. Papa John’s Int’l has a consensus target price of $56.80, suggesting a potential upside of 15.10%. Given Cheesecake Factory’s higher possible upside, research analysts clearly believe Cheesecake Factory is more favorable than Papa John’s Int’l.
Volatility & Risk
Cheesecake Factory has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500. Comparatively, Papa John’s Int’l has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500.
This table compares Cheesecake Factory and Papa John’s Int’l’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Papa John’s Int’l||-1.09%||-13.51%||6.37%|
Earnings & Valuation
This table compares Cheesecake Factory and Papa John’s Int’l’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Cheesecake Factory||$2.33 billion||0.88||$99.04 million||$2.43||18.66|
|Papa John’s Int’l||$1.57 billion||1.00||$1.65 million||$1.34||36.83|
Cheesecake Factory has higher revenue and earnings than Papa John’s Int’l. Cheesecake Factory is trading at a lower price-to-earnings ratio than Papa John’s Int’l, indicating that it is currently the more affordable of the two stocks.
Cheesecake Factory beats Papa John’s Int’l on 11 of the 17 factors compared between the two stocks.
About Cheesecake Factory
The Cheesecake Factory Incorporated engages in the operation of restaurants. The company produces cheesecakes and other baked products for own restaurants and international licensees, as well as external foodservice operators, retailers, and distributors. As of April 16, 2019, it owned and operated 219 full-service casual-dining restaurants in the United States, including Puerto Rico and Canada comprising 202 restaurants under The Cheesecake Factory name; 14 restaurants under the Grand Lux Café name; and 2 restaurants under the RockSugar Southeast Asian Kitchen name, as well as 22 The Cheesecake Factory restaurants under licensing agreements internationally. The company was founded in 1972 and is headquartered in Calabasas, California.
About Papa John’s Int’l
Papa John's International, Inc. operates and franchises pizza delivery and carryout restaurants under the Papa John's trademark in the United States and internationally. It operates through four segments: Domestic Company-Owned Restaurants, North America Commissaries, North America Franchising, and International Operations. The company also operates dine-in and delivery restaurants. As of December 30, 2018, it operated 5,303 Papa John's restaurants, which included 645 company-owned and 4,658 franchised restaurants. The company was founded in 1984 and is headquartered in Louisville, Kentucky.
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