Yum! Brands (NYSE:YUM) and Starbucks (NASDAQ:SBUX) 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 earnings, valuation, analyst recommendations, profitability, dividends, institutional ownership and risk.
Valuation and Earnings
This table compares Yum! Brands 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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Yum! Brands | $5.60 billion | 5.77 | $1.29 billion | $3.55 | 30.17 |
Starbucks | $23.52 billion | 5.17 | $928.30 million | $1.17 | 88.81 |
Yum! Brands has higher earnings, but lower revenue than Starbucks. Yum! Brands is trading at a lower price-to-earnings ratio than Starbucks, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Yum! Brands has a beta of 0.93, suggesting that its stock price is 7% 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 for Yum! Brands and Starbucks, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Yum! Brands | 1 | 11 | 8 | 0 | 2.35 |
Starbucks | 0 | 12 | 15 | 0 | 2.56 |
Yum! Brands presently has a consensus price target of $105.2222, indicating a potential downside of 1.74%. Starbucks has a consensus price target of $98.36, indicating a potential downside of 5.34%. Given Yum! Brands' higher probable upside, equities research analysts plainly believe Yum! Brands is more favorable than Starbucks.
Profitability
This table compares Yum! Brands and Starbucks' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Yum! Brands | 18.78% | -12.42% | 17.73% |
Starbucks | 3.95% | -18.07% | 4.88% |
Dividends
Yum! Brands pays an annual dividend of $1.88 per share and has a dividend yield of 1.8%. Starbucks pays an annual dividend of $1.80 per share and has a dividend yield of 1.7%. Yum! Brands pays out 53.0% 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. Starbucks has raised its dividend for 10 consecutive years. Yum! Brands is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional and Insider Ownership
75.2% of Yum! Brands shares are held by institutional investors. Comparatively, 67.3% of Starbucks shares are held by institutional investors. 0.7% of Yum! Brands shares are held by insiders. Comparatively, 0.4% of Starbucks shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Summary
Yum! Brands beats Starbucks on 12 of the 17 factors compared between the two stocks.