Reviewing Texas Roadhouse (NASDAQ:TXRH) & Boyd Gaming (NYSE:BYD)

Boyd Gaming (NYSE:BYD) and Texas Roadhouse (NASDAQ:TXRH) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, risk, profitability and earnings.

Analyst Recommendations

This is a summary of recent ratings and target prices for Boyd Gaming and Texas Roadhouse, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Boyd Gaming	0	10	4	1	2.40
Texas Roadhouse	0	12	10	1	2.52

Boyd Gaming presently has a consensus target price of $94.69, suggesting a potential upside of 36.98%. Texas Roadhouse has a consensus target price of $209.90, suggesting a potential upside of 32.47%. Given Boyd Gaming’s higher probable upside, equities research analysts clearly believe Boyd Gaming is more favorable than Texas Roadhouse.

Profitability

This table compares Boyd Gaming and Texas Roadhouse’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Boyd Gaming	44.34%	22.52%	8.80%
Texas Roadhouse	6.63%	27.20%	11.75%

Dividends

Boyd Gaming pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Texas Roadhouse pays an annual dividend of $3.00 per share and has a dividend yield of 1.9%. Boyd Gaming pays out 3.5% of its earnings in the form of a dividend. Texas Roadhouse pays out 48.0% 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. Boyd Gaming has raised its dividend for 4 consecutive years and Texas Roadhouse has raised its dividend for 6 consecutive years. Texas Roadhouse is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Boyd Gaming has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500. Comparatively, Texas Roadhouse has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500.

Valuation & Earnings

This table compares Boyd Gaming and Texas Roadhouse”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Boyd Gaming	$4.09 billion	1.23	$1.84 billion	$22.72	3.04
Texas Roadhouse	$5.88 billion	1.77	$405.55 million	$6.25	25.35

Boyd Gaming has higher earnings, but lower revenue than Texas Roadhouse. Boyd Gaming is trading at a lower price-to-earnings ratio than Texas Roadhouse, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

76.8% of Boyd Gaming shares are held by institutional investors. Comparatively, 94.8% of Texas Roadhouse shares are held by institutional investors. 22.8% of Boyd Gaming shares are held by insiders. Comparatively, 0.5% of Texas Roadhouse shares are held 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.

Summary

Texas Roadhouse beats Boyd Gaming on 10 of the 17 factors compared between the two stocks.

About Boyd Gaming

Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, and Pennsylvania. The company operates through Las Vegas Locals, Downtown Las Vegas, Midwest & South, and Online segments. It also engages in owning and operating a travel agency. Boyd Gaming Corporation was founded in 1975 and is headquartered in Las Vegas, Nevada.

About Texas Roadhouse

Texas Roadhouse, Inc., together with its subsidiaries, operates casual dining restaurants in the United States and internationally. It also operates and franchises restaurants under the Texas Roadhouse, Bubba's 33, and Jaggers names in 49 states and ten internationally. Texas Roadhouse, Inc. was founded in 1993 and is based in Louisville, Kentucky.