Wingstop (NASDAQ: WING) and Domino’s Pizza (NYSE:DPZ) are both retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitabiliy, analyst recommendations and risk.

Dividends

Domino’s Pizza pays an annual dividend of $1.84 per share and has a dividend yield of 1.0%. Wingstop does not pay a dividend. Domino’s Pizza pays out 36.7% of its earnings in the form of a dividend. Domino’s Pizza has raised its dividend for 3 consecutive years.

Institutional and Insider Ownership

98.6% of Domino’s Pizza shares are owned by institutional investors. 1.8% of Wingstop 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 large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Wingstop and Domino’s Pizza, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Wingstop 0 2 6 1 2.89
Domino’s Pizza 0 10 9 0 2.47

Wingstop presently has a consensus target price of $34.56, suggesting a potential upside of 5.22%. Domino’s Pizza has a consensus target price of $193.93, suggesting a potential upside of 0.73%. Given Wingstop’s stronger consensus rating and higher possible upside, equities analysts plainly believe Wingstop is more favorable than Domino’s Pizza.

Profitability

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

Net Margins Return on Equity Return on Assets
Wingstop 19.28% -28.04% 17.56%
Domino’s Pizza 9.40% -13.28% 34.03%

Risk & Volatility

Wingstop has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, Domino’s Pizza has a beta of 0.35, suggesting that its stock price is 65% less volatile than the S&P 500.

Valuation and Earnings

This table compares Wingstop and Domino’s Pizza’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Wingstop $97.80 million 9.73 $35.13 million $0.64 51.31
Domino’s Pizza $2.64 billion 3.52 $510.89 million $5.02 38.35

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

Summary

Domino’s Pizza beats Wingstop on 10 of the 18 factors compared between the two stocks.

Wingstop Company Profile

Wingstop Inc. is franchisor and operator of restaurants that specializes in cooked-to-order, hand-sauced and tossed chicken wings. The Company operates through two segments: Franchise and Company. As of December 31, 2016, the Company offers its guests 11 flavors on bone-in and boneless chicken wings paired with hand-cut, seasoned fries and sides. It is a casual chicken wings-focused restaurant chain with various concepts, which include wings as add-on menu items or focus on wings in a bar or sports-centric setting. The flavors include Atomic, Mango Habanero, Cajun, Original Hot, Louisiana Rub, Mild, Hickory Smoked BBQ, Lemon Pepper, Garlic Parmesan, Hawaiian and Teriyaki. It offers various order options, including eat-in, to go, individual, combo meals and family packs. The Company maintains Website hosting, and manages the development and maintenance of the mobile Wingstop application. It markets Wingstop products, services and restaurants through the Website, www.wingstop.com.

Domino’s Pizza Company Profile

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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