Critical Analysis: Wendy’s (NASDAQ:WEN) & Mitchells & Butlers (OTCMKTS:MBPFF)

Wendy’s (NASDAQ:WEN) and Mitchells & Butlers (OTCMKTS:MBPFF) are both retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Analyst Recommendations

This is a summary of recent ratings and price targets for Wendy’s and Mitchells & Butlers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wendy’s	5	17	4	1	2.04
Mitchells & Butlers	0	0	0	0	0.00

Wendy’s presently has a consensus target price of $10.34, suggesting a potential upside of 19.55%. Given Wendy’s’ stronger consensus rating and higher probable upside, research analysts plainly believe Wendy’s is more favorable than Mitchells & Butlers.

Risk & Volatility

Wendy’s has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500. Comparatively, Mitchells & Butlers has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500.

Profitability

This table compares Wendy’s and Mitchells & Butlers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wendy’s	8.43%	125.74%	3.88%
Mitchells & Butlers	N/A	N/A	N/A

Earnings & Valuation

This table compares Wendy’s and Mitchells & Butlers”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wendy’s	$2.25 billion	0.73	$194.36 million	$0.94	9.20
Mitchells & Butlers	$3.54 billion	0.62	$231.13 million	N/A	N/A

Mitchells & Butlers has higher revenue and earnings than Wendy’s.

Insider & Institutional Ownership

86.0% of Wendy’s shares are owned by institutional investors. 17.0% of Wendy’s shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Wendy’s beats Mitchells & Butlers on 10 of the 13 factors compared between the two stocks.

About Wendy’s

The Wendy’s Co. engages in operating, developing, and franchising a system of quick-service restaurants. It operates through the following segments: Wendy’s U.S., Wendy’s International, and Global Real Estate and Development. The Wendy’s U.S. segment includes the operation and franchising of Wendy’s restaurants in the U.S. The Wendy’s International segment is involved in the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. The Global Real Estate and Development segment focuses on real estate activity for owned sites and sites leased from third parties. The company was founded by R. David Thomas on November 15, 1969 and is headquartered in Dublin, OH.

About Mitchells & Butlers

Mitchells & Butlers plc engages in the management of pubs, bars, and restaurants in the United Kingdom and Germany. The company operates its pubs and restaurants under the Alex, All Bar One, Browns, Castle, EGO, Ember Inns, Harvester, High Street, Innkeeper's Lodge, Miller & Carter, Nicholson's, O'Neill's, Premium Country Pubs, Sizzling Pubs, Suburban, Stonehouse Pizza & Carvery, Toby Carvery, and Vintage Inns brands and formats. It also engages in the leisure retailing; property leasing, property management, and development; and financing activities, as well as operates as a healthcare trustee. In addition, the company owns various trademarks. The company was founded in 1898 and is headquartered in Birmingham, the United Kingdom.