Domino's Pizza (NYSE:DPZ) and Starbucks (NASDAQ:SBUX) are both large-cap retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, institutional ownership, risk and analyst recommendations.
Valuation & Earnings
This table compares Domino's Pizza and Starbucks' gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Domino's Pizza | $3.62 billion | 3.68 | $400.71 million | $9.57 | 35.84 |
Starbucks | $23.52 billion | 5.37 | $928.30 million | $1.17 | 91.62 |
Starbucks has higher revenue and earnings than Domino's Pizza. Domino's Pizza is trading at a lower price-to-earnings ratio than Starbucks, indicating that it is currently the more affordable of the two stocks.
Dividends
Domino's Pizza pays an annual dividend of $3.12 per share and has a dividend yield of 0.9%. Starbucks pays an annual dividend of $1.80 per share and has a dividend yield of 1.7%. Domino's Pizza pays out 32.6% of its earnings in the form of a dividend. Starbucks pays out 153.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Domino's Pizza has increased its dividend for 1 consecutive years and Starbucks has increased its dividend for 10 consecutive years. Starbucks is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Domino's Pizza and Starbucks' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Domino's Pizza | 11.98% | -14.11% | 31.41% |
Starbucks | 3.95% | -18.07% | 4.88% |
Risk and Volatility
Domino's Pizza has a beta of 0.38, suggesting that its stock price is 62% less volatile than the S&P 500. Comparatively, Starbucks has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.
Analyst Ratings
This is a summary of current ratings and target prices for Domino's Pizza and Starbucks, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Domino's Pizza | 0 | 8 | 21 | 0 | 2.72 |
Starbucks | 0 | 10 | 17 | 0 | 2.63 |
Domino's Pizza presently has a consensus price target of $423.8462, indicating a potential upside of 23.57%. Starbucks has a consensus price target of $102.8846, indicating a potential downside of 4.03%. Given Domino's Pizza's stronger consensus rating and higher probable upside, research analysts plainly believe Domino's Pizza is more favorable than Starbucks.
Insider & Institutional Ownership
88.8% of Domino's Pizza shares are owned by institutional investors. Comparatively, 67.3% of Starbucks shares are owned by institutional investors. 1.7% of Domino's Pizza shares are owned by insiders. Comparatively, 0.4% of Starbucks shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Summary
Domino's Pizza beats Starbucks on 10 of the 17 factors compared between the two stocks.