Texas Roadhouse (NASDAQ: TXRH) and BJ’s Restaurants (NASDAQ:BJRI) are both retail/wholesale companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, dividends, risk, profitabiliy, analyst recommendations, earnings and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations for Texas Roadhouse and BJ’s Restaurants, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Texas Roadhouse 1 10 8 0 2.37
BJ’s Restaurants 2 6 1 0 1.89

Texas Roadhouse presently has a consensus target price of $49.32, suggesting a potential downside of 1.76%. BJ’s Restaurants has a consensus target price of $37.14, suggesting a potential upside of 4.92%. Given BJ’s Restaurants’ higher probable upside, analysts clearly believe BJ’s Restaurants is more favorable than Texas Roadhouse.

Profitability

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

Net Margins Return on Equity Return on Assets
Texas Roadhouse 5.60% 16.42% 10.89%
BJ’s Restaurants 4.29% 14.86% 6.21%

Valuation and Earnings

This table compares Texas Roadhouse and BJ’s Restaurants’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Texas Roadhouse $2.04 billion 1.75 $271.01 million $1.60 31.38
BJ’s Restaurants $1.01 billion 0.76 $126.57 million $1.83 19.34

Texas Roadhouse has higher revenue and earnings than BJ’s Restaurants. BJ’s Restaurants is trading at a lower price-to-earnings ratio than Texas Roadhouse, indicating that it is currently the more affordable of the two stocks.

Dividends

Texas Roadhouse pays an annual dividend of $0.84 per share and has a dividend yield of 1.7%. BJ’s Restaurants does not pay a dividend. Texas Roadhouse pays out 52.5% of its earnings in the form of a dividend.

Institutional and Insider Ownership

88.3% of Texas Roadhouse shares are held by institutional investors. Comparatively, 93.9% of BJ’s Restaurants shares are held by institutional investors. 7.4% of Texas Roadhouse shares are held by insiders. Comparatively, 6.8% of BJ’s Restaurants shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Texas Roadhouse has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500. Comparatively, BJ’s Restaurants has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.

Summary

Texas Roadhouse beats BJ’s Restaurants on 11 of the 16 factors compared between the two stocks.

Texas Roadhouse Company Profile

Texas Roadhouse, Inc. is a restaurant company, which operates in the casual dining segment. The Company offers an assortment of seasoned and aged steaks, all cooked over open grills and all but one hand cut daily on the premises. Its restaurants offer a range of menu items at prices that are designed to appeal to a range of consumer tastes. The Company also offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, and an assortment of hamburgers, salads and sandwiches. The Company offers an assortment of wings, sandwiches, pizzas and burgers, including its bacon grind patty. In addition, the Company also offers its guests a selection of chicken, beef, fish and seafood. Other menu items include specialty appetizers, such as the Cactus Blossom and Rattlesnake Bites. As of December 27, 2016, the Company had 23 franchisees that operated 86 Texas Roadhouse restaurants in 23 states and six foreign countries.

BJ’s Restaurants Company Profile

BJ’s Restaurants, Inc. owns and operates restaurants. The Company segment includes casual dining company-owned restaurants. Each of its restaurants is operated either as a BJ’s Restaurant & Brewhouse, a BJ’s Restaurant & Brewery, a BJ’s Pizza & Grill or a BJ’s Grill restaurant. The Company’s restaurants offer craft beers and other beers, as well as a selection of appetizers, entrees, pastas, burgers and sandwiches, specialty salads, and desserts, including its warm pizza cookie dessert, the Pizookie. As of February 27, 2017, the Company owned and operated 189 restaurants located in 24 states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia and Washington.

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