Restaurant Brands International (NYSE:QSR) and Darden Restaurants (NYSE:DRI) are both large-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, analyst recommendations, earnings and profitability.
Analyst Ratings
This is a summary of recent ratings for Restaurant Brands International and Darden Restaurants, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Restaurant Brands International | 1 | 6 | 18 | 0 | 2.68 |
Darden Restaurants | 0 | 10 | 20 | 0 | 2.67 |
Restaurant Brands International currently has a consensus target price of $65.1818, suggesting a potential upside of 5.25%. Darden Restaurants has a consensus target price of $114.1833, suggesting a potential downside of 17.87%. Given Restaurant Brands International's stronger consensus rating and higher possible upside, analysts plainly believe Restaurant Brands International is more favorable than Darden Restaurants.
Dividends
Restaurant Brands International pays an annual dividend of $2.08 per share and has a dividend yield of 3.4%. Darden Restaurants pays an annual dividend of $1.48 per share and has a dividend yield of 1.1%. Restaurant Brands International pays out 76.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Darden Restaurants pays out 47.3% of its earnings in the form of a dividend. Restaurant Brands International has raised its dividend for 6 consecutive years. Restaurant Brands International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
79.5% of Restaurant Brands International shares are owned by institutional investors. Comparatively, 89.4% of Darden Restaurants shares are owned by institutional investors. 3.7% of Restaurant Brands International shares are owned by insiders. Comparatively, 1.0% of Darden Restaurants shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares Restaurant Brands International and Darden Restaurants' revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Restaurant Brands International | $5.60 billion | 3.36 | $643 million | $2.72 | 22.66 |
Darden Restaurants | $7.81 billion | 2.33 | $-52,400,000.00 | $3.13 | 44.52 |
Restaurant Brands International has higher earnings, but lower revenue than Darden Restaurants. Restaurant Brands International is trading at a lower price-to-earnings ratio than Darden Restaurants, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Restaurant Brands International and Darden Restaurants' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Restaurant Brands International | 11.00% | 26.67% | 4.70% |
Darden Restaurants | -1.70% | 10.47% | 2.51% |
Risk & Volatility
Restaurant Brands International has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500. Comparatively, Darden Restaurants has a beta of 1.48, suggesting that its share price is 48% more volatile than the S&P 500.
Summary
Restaurant Brands International beats Darden Restaurants on 11 of the 17 factors compared between the two stocks.