Chipotle Mexican Grill (CMG) & Wendy’s Company (The) (NASDAQ:WEN) Critical Comparison
Chipotle Mexican Grill (NYSE: CMG) and Wendy’s Company (The) (NASDAQ:WEN) are both mid-cap retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their profitabiliy, risk, dividends, earnings, institutional ownership, analyst recommendations and valuation.
Insider and Institutional Ownership
97.3% of Chipotle Mexican Grill shares are owned by institutional investors. Comparatively, 77.8% of Wendy’s Company (The) shares are owned by institutional investors. 2.0% of Chipotle Mexican Grill shares are owned by company insiders. Comparatively, 26.5% of Wendy’s Company (The) shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
This is a summary of current recommendations and price targets for Chipotle Mexican Grill and Wendy’s Company (The), as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Chipotle Mexican Grill||6||20||10||0||2.11|
|Wendy’s Company (The)||0||8||7||0||2.47|
Chipotle Mexican Grill currently has a consensus target price of $402.10, suggesting a potential upside of 24.62%. Wendy’s Company (The) has a consensus target price of $15.46, suggesting a potential upside of 1.39%. Given Chipotle Mexican Grill’s higher possible upside, research analysts plainly believe Chipotle Mexican Grill is more favorable than Wendy’s Company (The).
Earnings and Valuation
This table compares Chipotle Mexican Grill and Wendy’s Company (The)’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Chipotle Mexican Grill||$4.31 billion||2.13||$397.78 million||$4.74||68.07|
|Wendy’s Company (The)||$1.34 billion||2.79||$371.36 million||$0.48||31.77|
Chipotle Mexican Grill has higher revenue and earnings than Wendy’s Company (The). Wendy’s Company (The) is trading at a lower price-to-earnings ratio than Chipotle Mexican Grill, indicating that it is currently the more affordable of the two stocks.
This table compares Chipotle Mexican Grill and Wendy’s Company (The)’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Chipotle Mexican Grill||3.17%||10.65%||7.38%|
|Wendy’s Company (The)||9.43%||16.31%||2.45%|
Risk & Volatility
Chipotle Mexican Grill has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, Wendy’s Company (The) has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500.
Wendy’s Company (The) pays an annual dividend of $0.28 per share and has a dividend yield of 1.8%. Chipotle Mexican Grill does not pay a dividend. Wendy’s Company (The) pays out 58.3% of its earnings in the form of a dividend.
Chipotle Mexican Grill beats Wendy’s Company (The) on 9 of the 16 factors compared between the two stocks.
About Chipotle Mexican Grill
Chipotle Mexican Grill, Inc. (Chipotle), together with its subsidiaries, operates Chipotle Mexican Grill restaurants. The Company’s Chipotle Mexican Grill restaurants serve a menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. As of December 31, 2016, the Company managed its operations and restaurants based on 11 regions. As of December 31, 2016, the Company operated 2,198 Chipotle restaurants throughout the United States, as well as 29 international Chipotle restaurants, and it also had 23 restaurants in operation in other non-Chipotle concepts. As of December 31, 2016, 29 of its restaurants were located outside of the United States, with 17 in Canada, six in the United Kingdom, five in France and one in Frankfurt, Germany. The Company sells gift cards, which do not have an expiration date. The Company categorizes its restaurants as end-caps (at the end of a line of retail outlets), in-lines (in a line of retail outlets), free-standing or other.
About Wendy’s Company (The)
The Wendy’s Company is the parent company of subsidiary holding company Wendy’s Restaurants, LLC (Wendy’s Restaurants). Wendy’s Restaurants is the parent company of Wendy’s International, LLC (Wendy’s), which is the owner and franchisor of the Wendy’s restaurant system in the United States. Wendy’s is a restaurant company specializing in the hamburger sandwich segment. Wendy’s is engaged in the business of operating, developing and franchising a system of restaurants serving food. The Company operated approximately 6,080 Wendy’s restaurants in operation in North America, as of January 1, 2017. Of these restaurants, 330 were operated by the Company and 5,768 by a total of 376 franchisees, as of January 1, 2017. In addition, as of January 1, 2017, there were 439 franchised Wendy’s restaurants in operation in 29 countries and territories other than North America. Wendy’s is also a partner in a restaurant real estate joint venture with a subsidiary of Restaurant Brands International Inc.
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