The Cheesecake Factory (NASDAQ: CAKE) and Buffalo Wild Wings (NASDAQ:BWLD) are both retail/wholesale companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, profitabiliy and risk.

Insider and Institutional Ownership

96.4% of The Cheesecake Factory shares are owned by institutional investors. Comparatively, 94.5% of Buffalo Wild Wings shares are owned by institutional investors. 8.5% of The Cheesecake Factory shares are owned by company insiders. Comparatively, 1.2% of Buffalo Wild Wings shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk and Volatility

The Cheesecake Factory has a beta of 0.31, meaning that its stock price is 69% less volatile than the S&P 500. Comparatively, Buffalo Wild Wings has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500.

Dividends

The Cheesecake Factory pays an annual dividend of $0.96 per share and has a dividend yield of 2.1%. Buffalo Wild Wings does not pay a dividend. The Cheesecake Factory pays out 33.7% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings for The Cheesecake Factory and Buffalo Wild Wings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Cheesecake Factory 1 12 5 0 2.22
Buffalo Wild Wings 1 18 5 0 2.17

The Cheesecake Factory presently has a consensus target price of $54.59, indicating a potential upside of 21.47%. Buffalo Wild Wings has a consensus target price of $140.20, indicating a potential upside of 23.42%. Given Buffalo Wild Wings’ higher possible upside, analysts plainly believe Buffalo Wild Wings is more favorable than The Cheesecake Factory.

Valuation and Earnings

This table compares The Cheesecake Factory and Buffalo Wild Wings’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Cheesecake Factory $2.30 billion 0.90 $283.81 million $2.85 15.77
Buffalo Wild Wings $2.02 billion 0.87 $261.12 million $3.90 29.13

The Cheesecake Factory has higher revenue and earnings than Buffalo Wild Wings. The Cheesecake Factory is trading at a lower price-to-earnings ratio than Buffalo Wild Wings, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares The Cheesecake Factory and Buffalo Wild Wings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Cheesecake Factory 6.10% 22.92% 11.11%
Buffalo Wild Wings 3.39% 17.14% 7.49%

Summary

The Cheesecake Factory beats Buffalo Wild Wings on 10 of the 15 factors compared between the two stocks.

The Cheesecake Factory Company Profile

The Cheesecake Factory Incorporated is engaged in the restaurant and bakery business. As of March 2, 2017, the Company operated 208 Company-owned restaurants: 194 under The Cheesecake Factory mark, 13 under the Grand Lux Cafe mark and one under the Rock Sugar Pan Asian Kitchen mark. The Company’s segments include The Cheesecake Factory restaurants, and other. It also operates bakery production facilities, which produce desserts for its restaurants, international licensees and third-party bakery customers. Its restaurants offer lunch and dinner, as well as Sunday brunch. Its restaurants also offer a bar. As of January 3, 2017, its menu consisted of over 200 items in addition to items presented on supplemental menus, such as its SkinnyLicious menu, which offers approximately 50 items. Its Grand Lux Cafe is a casual dining concept that offers artisan cuisine. It offers appetizers, seafood and steaks.

Buffalo Wild Wings Company Profile

Buffalo Wild Wings, Inc. is the owner, operator and franchisor of restaurants. As of December 25, 2016, the Company’s made-to-order menu items included 16 sauces and five seasonings, ranging from Sweet BBQ to Blazin. The Company’s restaurants offer 20 to 40 domestic and imported beers on tap, including craft brews, and a selection of bottled beers, wines and liquor. As of December 25, 2016, the Company had company-owned or franchised restaurants in all 50 states and two Canadian provinces. Its franchised restaurants also operate in Mexico, Saudi Arabia, Philippines, Panama and the United Arab Emirates. The Company operates Buffalo Wild Wings, R Taco and PizzaRev restaurants, as well as sells Buffalo Wild Wings and R Taco restaurant franchises. In addition to traditional and boneless chicken wings, the Company’s menu features a range of food items, including sharables, hamburgers, sandwiches, wraps, Buffalito soft tacos, and salads.

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