Papa John’s International (NASDAQ: PZZA) and DineEquity (NYSE:DIN) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, dividends, analyst recommendations, risk, institutional ownership, earnings and valuation.

Dividends

Papa John’s International pays an annual dividend of $0.90 per share and has a dividend yield of 1.2%. DineEquity pays an annual dividend of $3.88 per share and has a dividend yield of 10.2%. Papa John’s International pays out 31.4% of its earnings in the form of a dividend. DineEquity pays out 86.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Papa John’s International has increased its dividend for 2 consecutive years.

Risk and Volatility

Papa John’s International has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500. Comparatively, DineEquity has a beta of 0.4, suggesting that its stock price is 60% less volatile than the S&P 500.

Insider and Institutional Ownership

83.8% of Papa John’s International shares are held by institutional investors. Comparatively, 92.0% of DineEquity shares are held by institutional investors. 27.7% of Papa John’s International shares are held by company insiders. Comparatively, 2.2% of DineEquity shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Papa John’s International and DineEquity’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Papa John’s International 6.13% 919.82% 19.48%
DineEquity 13.02% 38.34% 4.35%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Papa John’s International and DineEquity, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Papa John’s International 0 3 3 0 2.50
DineEquity 0 4 3 0 2.43

Papa John’s International presently has a consensus target price of $90.20, indicating a potential upside of 24.35%. DineEquity has a consensus target price of $57.00, indicating a potential upside of 49.68%. Given DineEquity’s higher probable upside, analysts plainly believe DineEquity is more favorable than Papa John’s International.

Valuation and Earnings

This table compares Papa John’s International and DineEquity’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Papa John’s International $1.75 billion 1.51 $198.59 million $2.87 25.28
DineEquity $621.56 million 1.10 $234.57 million $4.48 8.50

DineEquity has higher revenue, but lower earnings than Papa John’s International. DineEquity is trading at a lower price-to-earnings ratio than Papa John’s International, indicating that it is currently the more affordable of the two stocks.

Summary

Papa John’s International beats DineEquity on 10 of the 16 factors compared between the two stocks.

Papa John’s International Company Profile

Papa John’s International, Inc. (Papa John’s) operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and delivery restaurants under the trademark Papa John’s. The Company operates through five segments: domestic Company-owned restaurants, North America commissaries, North America franchising, international operations and all other business units. North America is defined as the United States and Canada. Domestic is defined as the contiguous United States. International franchisees are defined as all franchise operations outside of the United States and Canada. As of December 25, 2016, there were 5,097 Papa John’s restaurants in operation, consisting of 744 Company-owned and 4,353 franchised restaurants operating domestically in all 50 states and in 45 countries and territories. It offers pizza along with side items, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages.

DineEquity Company Profile

DineEquity, Inc., through its subsidiaries, owns and franchises the Applebee’s Neighborhood Grill & Bar (Applebee’s) concept in the bar and grill segment within the casual dining category of the restaurant industry, and owns, franchises and operates the International House of Pancakes (IHOP) concept in the family dining category of the restaurant industry. It operates through four segments: Franchise operations, Rental operations, Company restaurant operations and Financing operations. As of December 31, 2016, it had 3,749 restaurants. Applebee’s menu features a selection of grill and bar fare, such as appetizers, bar snacks, burgers, classic entrees and lighter fare, as well as cocktails, beers and desserts. As of December 31, 2016, IHOP franchise and area license restaurants were located in all 50 states within the United States, in the District of Columbia, in three United States territories and in 10 countries outside of the United States.

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