Red Robin Gourmet Burgers (NASDAQ: RRGB) and Chipotle Mexican Grill (NYSE:CMG) are both retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Volatility and Risk

Red Robin Gourmet Burgers has a beta of 0.63, indicating that its stock price is 37% less volatile than the S&P 500. Comparatively, Chipotle Mexican Grill has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500.

Insider & Institutional Ownership

90.3% of Chipotle Mexican Grill shares are held by institutional investors. 2.7% of Red Robin Gourmet Burgers shares are held by company insiders. Comparatively, 2.0% of Chipotle Mexican Grill shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Red Robin Gourmet Burgers and Chipotle Mexican Grill’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Red Robin Gourmet Burgers 0.64% 8.00% 3.18%
Chipotle Mexican Grill 3.17% 10.65% 7.38%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Red Robin Gourmet Burgers and Chipotle Mexican Grill, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Red Robin Gourmet Burgers 0 4 6 0 2.60
Chipotle Mexican Grill 4 21 10 0 2.17

Red Robin Gourmet Burgers presently has a consensus target price of $72.67, indicating a potential upside of 22.13%. Chipotle Mexican Grill has a consensus target price of $399.84, indicating a potential upside of 29.47%. Given Chipotle Mexican Grill’s higher possible upside, analysts clearly believe Chipotle Mexican Grill is more favorable than Red Robin Gourmet Burgers.

Valuation and Earnings

This table compares Red Robin Gourmet Burgers and Chipotle Mexican Grill’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Red Robin Gourmet Burgers $1.32 billion 0.58 $131.93 million $0.64 92.97
Chipotle Mexican Grill $4.31 billion 2.04 $397.78 million $4.74 65.15

Chipotle Mexican Grill has higher revenue and earnings than Red Robin Gourmet Burgers. Chipotle Mexican Grill is trading at a lower price-to-earnings ratio than Red Robin Gourmet Burgers, indicating that it is currently the more affordable of the two stocks.

Summary

Chipotle Mexican Grill beats Red Robin Gourmet Burgers on 12 of the 14 factors compared between the two stocks.

Red Robin Gourmet Burgers Company Profile

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, primarily develops, operates, and franchises full-service restaurants in North America and focuses on serving selection of gourmet burgers. The Company’s menu features a line of gourmet burgers, which it makes from ground beef, as well as its line of Red’s Tavern Double Burgers and its Red Robin’s line of half-pound Angus beef burgers with various toppings. The Company also offers burgers made from chicken breasts, fish fillets, turkey patties, as well as vegetarian and vegan options. The Company offered a selection of buns, including ciabatta, gluten free, sesame, onion, whole grain, jalapeno and lettuce wraps a range of toppings, including fresh guacamole, house made barbeque sauces, aiolis, grilled pineapple, crispy onion straws, sauteed mushrooms, fried jalapenos, bruschetta salsa, coleslaw, eight different cheese choices and a fried egg, as of December 25, 2016.

Chipotle Mexican Grill Company Profile

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.

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