The Cheesecake Factory (NASDAQ: CAKE) and Bob Evans Farms (NASDAQ:BOBE) are both small-cap retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, analyst recommendations, risk, earnings and profitability.

Dividends

The Cheesecake Factory pays an annual dividend of $1.16 per share and has a dividend yield of 2.8%. Bob Evans Farms pays an annual dividend of $1.36 per share and has a dividend yield of 1.8%. The Cheesecake Factory pays out 40.7% of its earnings in the form of a dividend. Bob Evans Farms pays out 22.1% 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. The Cheesecake Factory has raised its dividend for 9 consecutive years. The Cheesecake Factory is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares The Cheesecake Factory and Bob Evans Farms’ 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%
Bob Evans Farms 19.49% 19.52% 7.55%

Volatility and Risk

The Cheesecake Factory has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500. Comparatively, Bob Evans Farms has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for The Cheesecake Factory and Bob Evans Farms, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Cheesecake Factory 1 12 5 0 2.22
Bob Evans Farms 0 6 2 0 2.25

The Cheesecake Factory presently has a consensus price target of $53.18, indicating a potential upside of 27.13%. Bob Evans Farms has a consensus price target of $75.92, indicating a potential downside of 2.03%. Given The Cheesecake Factory’s higher probable upside, equities research analysts plainly believe The Cheesecake Factory is more favorable than Bob Evans Farms.

Insider & Institutional Ownership

96.2% of The Cheesecake Factory shares are held by institutional investors. Comparatively, 76.9% of Bob Evans Farms shares are held by institutional investors. 8.5% of The Cheesecake Factory shares are held by insiders. Comparatively, 1.2% of Bob Evans Farms shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares The Cheesecake Factory and Bob Evans Farms’ gross 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 0.84 $283.91 million $2.85 14.68
Bob Evans Farms $418.17 million 3.70 $64.75 million $6.16 12.58

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

Summary

The Cheesecake Factory beats Bob Evans Farms on 10 of the 17 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.

Bob Evans Farms Company Profile

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.

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