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

Earnings and Valuation

This table compares Texas Roadhouse and Bob Evans Farms’ top-line revenue, earnings per share 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 31.42
Bob Evans Farms $394.84 million 3.41 $71.50 million $6.27 10.77

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

Analyst Ratings

This is a summary of current ratings and target prices for Texas Roadhouse and Bob Evans Farms, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Texas Roadhouse 1 10 8 0 2.37
Bob Evans Farms 0 3 3 0 2.50

Texas Roadhouse currently has a consensus price target of $49.32, indicating a potential downside of 1.90%. Bob Evans Farms has a consensus price target of $75.68, indicating a potential upside of 12.10%. Given Bob Evans Farms’ stronger consensus rating and higher probable upside, analysts clearly believe Bob Evans Farms is more favorable than Texas Roadhouse.

Volatility & Risk

Texas Roadhouse has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, Bob Evans Farms has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500.

Profitability

This table compares Texas Roadhouse and Bob Evans Farms’ 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%
Bob Evans Farms 15.15% 19.58% 6.82%

Institutional and Insider Ownership

88.3% of Texas Roadhouse shares are owned by institutional investors. Comparatively, 78.4% of Bob Evans Farms shares are owned by institutional investors. 7.4% of Texas Roadhouse shares are owned by insiders. Comparatively, 1.2% of Bob Evans Farms shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Texas Roadhouse pays an annual dividend of $0.84 per share and has a dividend yield of 1.7%. Bob Evans Farms pays an annual dividend of $1.36 per share and has a dividend yield of 2.0%. Texas Roadhouse pays out 52.5% of its earnings in the form of a dividend. Bob Evans Farms pays out 21.7% 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. Texas Roadhouse has increased its dividend for 9 consecutive years. Bob Evans Farms is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Texas Roadhouse beats Bob Evans Farms on 9 of the 17 factors compared between the two stocks.

About Texas Roadhouse

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.

About Bob Evans Farms

Bob Evans Farms, Inc. (Bob Evans) is a producer and distributor of refrigerated potato, pasta and vegetable-based side dishes, pork sausage, and a variety of refrigerated and frozen food items under the Bob Evans and Owens or Country Creek brand names. The Company’s food products are distributed to customers throughout the United States. Additionally, the Company manufactures and sells similar products to foodservice customers, restaurants and food sellers. The Company operates through BEF Foods segment. The BEF Foods segment offers a range of wholesome food products to retail and foodservice customers. The Company produces food products in its four manufacturing facilities. It produces sausage products at its plants located in Hillsdale, Michigan, and Xenia, Ohio.

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