Yum! Brands (NYSE: YUM) and Domino’s Pizza (NYSE:DPZ) are both mid-cap retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitabiliy, institutional ownership, risk, dividends, valuation and earnings.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Yum! Brands and Domino’s Pizza, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yum! Brands 0 14 11 0 2.44
Domino’s Pizza 0 11 8 0 2.42

Yum! Brands currently has a consensus price target of $76.29, indicating a potential upside of 2.27%. Domino’s Pizza has a consensus price target of $191.43, indicating a potential upside of 2.68%. Given Domino’s Pizza’s higher probable upside, analysts clearly believe Domino’s Pizza is more favorable than Yum! Brands.

Insider and Institutional Ownership

73.6% of Yum! Brands shares are owned by institutional investors. Comparatively, 98.9% of Domino’s Pizza shares are owned by institutional investors. 7.4% of Yum! Brands 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 endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Yum! Brands has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500. Comparatively, Domino’s Pizza has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500.

Earnings and Valuation

This table compares Yum! Brands and Domino’s Pizza’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Yum! Brands $6.34 billion 4.10 $1.99 billion $3.85 19.37
Domino’s Pizza $2.56 billion 3.50 $499.98 million $5.02 37.14

Yum! Brands has higher revenue and earnings than Domino’s Pizza. Yum! Brands is trading at a lower price-to-earnings ratio than Domino’s Pizza, indicating that it is currently the more affordable of the two stocks.

Dividends

Yum! Brands pays an annual dividend of $1.20 per share and has a dividend yield of 1.6%. Domino’s Pizza pays an annual dividend of $1.84 per share and has a dividend yield of 1.0%. Yum! Brands pays out 31.2% of its earnings in the form of a dividend. Domino’s Pizza pays out 36.7% 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. Yum! Brands has raised its dividend for 3 consecutive years and Domino’s Pizza has raised its dividend for 8 consecutive years. Yum! Brands is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Yum! Brands and Domino’s Pizza’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yum! Brands 15.44% -37.63% 17.54%
Domino’s Pizza 9.40% -13.28% 34.03%

Summary

Yum! Brands beats Domino’s Pizza on 10 of the 17 factors compared between the two stocks.

About Yum! Brands

YUM! Brands, Inc. is engaged in restaurant business. As of December 31, 2016, the Company operated or franchised over 43,500 restaurants in more than 135 countries and territories operating under the KFC, Pizza Hut or Taco Bell (collectively the Concepts) brands. The Company operates through three segments: The KFC Division, which includes the operations of the KFC concept around the world; The Pizza Hut Division, which includes the operations of the Pizza Hut concept around the world, and The Taco Bell Division, which includes the operations of the Taco Bell concept around the world. KFC restaurants across the world offer fried and non-fried chicken products, such as sandwiches, chicken strips, chicken-on-the-bone and other chicken products. Pizza Hut is a restaurant chain specialized in the sale of ready-to-eat pizza products. Taco Bell specializes in Mexican-style food products, including various types of tacos, burritos, quesadillas, salads, nachos and other related items.

About Domino’s Pizza

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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