Bob Evans Farms (NASDAQ: BOBE) and Texas Roadhouse (NASDAQ:TXRH) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, profitabiliy, earnings, analyst recommendations and risk.

Analyst Ratings

This is a breakdown of current recommendations for Bob Evans Farms and Texas Roadhouse, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bob Evans Farms 0 3 3 0 2.50
Texas Roadhouse 1 10 8 0 2.37

Bob Evans Farms presently has a consensus target price of $75.68, indicating a potential upside of 9.11%. Texas Roadhouse has a consensus target price of $49.44, indicating a potential upside of 1.15%. Given Bob Evans Farms’ stronger consensus rating and higher probable upside, analysts plainly believe Bob Evans Farms is more favorable than Texas Roadhouse.

Institutional and Insider Ownership

78.4% of Bob Evans Farms shares are held by institutional investors. Comparatively, 88.4% of Texas Roadhouse shares are held by institutional investors. 1.2% of Bob Evans Farms shares are held by company insiders. Comparatively, 7.4% of Texas Roadhouse shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Bob Evans Farms has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500. Comparatively, Texas Roadhouse has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500.

Earnings & Valuation

This table compares Bob Evans Farms and Texas Roadhouse’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Bob Evans Farms $394.84 million 3.50 $71.50 million $6.27 11.06
Texas Roadhouse $2.04 billion 1.70 $271.01 million $1.60 30.55

Texas Roadhouse has higher revenue and earnings than Bob Evans Farms. Bob Evans Farms is trading at a lower price-to-earnings ratio than Texas Roadhouse, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Bob Evans Farms and Texas Roadhouse’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bob Evans Farms 15.15% 19.58% 6.82%
Texas Roadhouse 5.60% 16.42% 10.89%

Dividends

Bob Evans Farms pays an annual dividend of $1.36 per share and has a dividend yield of 2.0%. Texas Roadhouse pays an annual dividend of $0.84 per share and has a dividend yield of 1.7%. Bob Evans Farms pays out 21.7% of its earnings in the form of a dividend. Texas Roadhouse pays out 52.5% 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. Bob Evans Farms has raised its dividend for 9 consecutive years. Bob Evans Farms is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Bob Evans Farms beats Texas Roadhouse on 9 of the 17 factors compared between the two stocks.

About Bob Evans Farms

Bob Evans Farms, Inc. (Bob Evans) is a producer and distributor of refrigerated potato, pasta and vegetable-based side dishes, pork sausage, and a variety of refrigerated and frozen food items under the Bob Evans and Owens or Country Creek brand names. The Company’s food products are distributed to customers throughout the United States. Additionally, the Company manufactures and sells similar products to foodservice customers, restaurants and food sellers. The Company operates through BEF Foods segment. The BEF Foods segment offers a range of wholesome food products to retail and foodservice customers. The Company produces food products in its four manufacturing facilities. It produces sausage products at its plants located in Hillsdale, Michigan, and Xenia, Ohio.

About Texas Roadhouse

Texas Roadhouse, Inc. is a restaurant company, which operates in the casual dining segment. The Company offers an assortment of seasoned and aged steaks, all cooked over open grills and all but one hand cut daily on the premises. Its restaurants offer a range of menu items at prices that are designed to appeal to a range of consumer tastes. The Company also offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, and an assortment of hamburgers, salads and sandwiches. The Company offers an assortment of wings, sandwiches, pizzas and burgers, including its bacon grind patty. In addition, the Company also offers its guests a selection of chicken, beef, fish and seafood. Other menu items include specialty appetizers, such as the Cactus Blossom and Rattlesnake Bites. As of December 27, 2016, the Company had 23 franchisees that operated 86 Texas Roadhouse restaurants in 23 states and six foreign countries.

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