Critical Comparison: Red Robin Gourmet Burgers (RRGB) versus Domino’s Pizza (DPZ)
Red Robin Gourmet Burgers (NASDAQ: RRGB) and Domino’s Pizza (NYSE:DPZ) are both retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.
This table compares Red Robin Gourmet Burgers and Domino’s Pizza’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Red Robin Gourmet Burgers||0.94%||7.32%||2.94%|
Domino’s Pizza pays an annual dividend of $1.84 per share and has a dividend yield of 1.0%. Red Robin Gourmet Burgers does not pay a dividend. Domino’s Pizza pays out 35.0% of its earnings in the form of a dividend. Domino’s Pizza has increased its dividend for 3 consecutive years.
Institutional and Insider Ownership
94.2% of Domino’s Pizza shares are owned by institutional investors. 2.7% of Red Robin Gourmet Burgers shares are owned by company insiders. Comparatively, 3.6% of Domino’s Pizza shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This is a breakdown of recent ratings for Red Robin Gourmet Burgers and Domino’s Pizza, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Red Robin Gourmet Burgers||0||6||5||0||2.45|
Red Robin Gourmet Burgers currently has a consensus target price of $68.60, indicating a potential upside of 33.07%. Domino’s Pizza has a consensus target price of $206.90, indicating a potential upside of 15.26%. Given Red Robin Gourmet Burgers’ higher probable upside, analysts plainly believe Red Robin Gourmet Burgers is more favorable than Domino’s Pizza.
Valuation & Earnings
This table compares Red Robin Gourmet Burgers and Domino’s Pizza’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Red Robin Gourmet Burgers||$1.30 billion||0.51||$11.72 million||$0.95||54.26|
|Domino’s Pizza||$2.47 billion||3.17||$214.67 million||$5.25||34.19|
Domino’s Pizza has higher revenue and earnings than Red Robin Gourmet Burgers. Domino’s Pizza 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.
Volatility and Risk
Red Robin Gourmet Burgers has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Domino’s Pizza has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500.
Domino’s Pizza beats Red Robin Gourmet Burgers on 13 of the 17 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.
Domino’s Pizza Company Profile
Domino’s Pizza, Inc. is a pizza restaurant chain company. As of January 1, 2017, the Company operated in over 13,800 locations in over 85 markets around the world. The Company operates through three segments: domestic stores, international franchise and supply chain. Its basic menu features pizza products in various sizes and crust types. As of January 1, 2017, its Domestic Stores segment consisted primarily of its franchise operations, which consisted of 4,979 franchised stores located in the contiguous United States. As of January 1, 2017, its International Franchise segment consisted of a network of franchised stores in over 85 international markets. As of January 1, 2017, its supply chain segment operated 18 regional dough manufacturing and food supply chain centers in the United States, one thin crust manufacturing center, one vegetable processing center and one center providing equipment and supplies to certain of its domestic and international stores.
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