Analyzing Zoe’s Kitchen (ZOES) & Darden Restaurants (DRI)
Zoe’s Kitchen (NYSE: ZOES) and Darden Restaurants (NYSE:DRI) are both retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, profitability, analyst recommendations and earnings.
Insider and Institutional Ownership
88.7% of Darden Restaurants shares are owned by institutional investors. 3.0% of Zoe’s Kitchen shares are owned by insiders. Comparatively, 0.6% of Darden Restaurants shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Darden Restaurants pays an annual dividend of $2.52 per share and has a dividend yield of 3.0%. Zoe’s Kitchen does not pay a dividend. Darden Restaurants pays out 66.1% of its earnings in the form of a dividend.
Earnings and Valuation
This table compares Zoe’s Kitchen and Darden Restaurants’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Zoe’s Kitchen||$294.14 million||0.86||$22.57 million||($0.02)||-647.50|
|Darden Restaurants||$7.17 billion||1.45||$940.00 million||$3.81||21.80|
Darden Restaurants has higher revenue and earnings than Zoe’s Kitchen. Zoe’s Kitchen is trading at a lower price-to-earnings ratio than Darden Restaurants, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Zoe’s Kitchen has a beta of 0.34, meaning that its share price is 66% less volatile than the S&P 500. Comparatively, Darden Restaurants has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500.
This table compares Zoe’s Kitchen and Darden Restaurants’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of current recommendations and price targets for Zoe’s Kitchen and Darden Restaurants, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Zoe’s Kitchen currently has a consensus price target of $17.55, suggesting a potential upside of 35.52%. Darden Restaurants has a consensus price target of $84.48, suggesting a potential upside of 1.71%. Given Zoe’s Kitchen’s stronger consensus rating and higher probable upside, research analysts clearly believe Zoe’s Kitchen is more favorable than Darden Restaurants.
Darden Restaurants beats Zoe’s Kitchen on 10 of the 15 factors compared between the two stocks.
About Zoe’s Kitchen
Zoe’s Kitchen, Inc. develops and operates fast-casual restaurants serving a menu of fresh, wholesome, Mediterranean-inspired dishes delivered with Southern hospitality. The Company’s menu offers meals made from scratch using produce, proteins and other ingredients, including its appetizers, soups, salads and kabobs. Its food, including both hot and cold items, is suited for catering to a range of business and social occasions. It caters to a range of dietary needs by offering vegetarian, vegan, gluten-free and its calorie conscious, Simply 500 menu selections. Its party packs serve groups of approximately 10 and are each filled with their own combination of fresh fruits, veggies, proteins and grains. The Company serves dishes for various occasions, such as Guilt-Free Girls Night, Game Day Goodies, Shower Sensations and Kids’ Party Pack. As of December 26, 2016, it had operated 201 Company-owned restaurants and three franchise restaurants in 20 states across the United States.
About Darden Restaurants
Darden Restaurants, Inc. is a full-service restaurant company. The Company owned and operated 1,536 restaurants through its subsidiaries in the United States and Canada, as of May 29, 2016. The Company’s segments include Olive Garden, LongHorn Steakhouse, Fine Dining (which includes The Capital Grille, and Eddie V’s Prime Seafood and Wildfish Seafood Grille (Eddie V’s)) and Other Business (which includes Yard House, Seasons 52, Bahama Breeze, consumer-packaged goods and franchise revenues). As of May 29, 2016, the Company also had 50 restaurants operated by independent third parties pursuant to area development and franchise agreements. Olive Garden’s menu includes a range of authentic Italian foods featuring fresh ingredients and a selection of imported Italian wines. LongHorn Steakhouse restaurants feature a range of menu items, including fresh steaks and chicken, as well as salmon, shrimp, ribs, pork chops, burgers and prime rib.
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