Texas Roadhouse (NASDAQ: TXRH) and Buffalo Wild Wings (NASDAQ:BWLD) are both retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Dividends

Texas Roadhouse pays an annual dividend of $0.84 per share and has a dividend yield of 1.7%. Buffalo Wild Wings does not pay a dividend. Texas Roadhouse pays out 50.6% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Texas Roadhouse and Buffalo Wild Wings’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Texas Roadhouse $2.10 billion 1.63 $278.28 million $1.66 28.99
Buffalo Wild Wings $2.02 billion 0.81 $261.12 million $3.90 26.94

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

Institutional and Insider Ownership

86.0% of Texas Roadhouse shares are held by institutional investors. Comparatively, 88.5% of Buffalo Wild Wings shares are held by institutional investors. 7.4% of Texas Roadhouse shares are held by insiders. Comparatively, 1.2% of Buffalo Wild Wings shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Texas Roadhouse and Buffalo Wild Wings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Texas Roadhouse 5.63% 16.49% 10.94%
Buffalo Wild Wings 3.39% 17.14% 7.49%

Analyst Ratings

This is a summary of recent recommendations and price targets for Texas Roadhouse and Buffalo Wild Wings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Texas Roadhouse 1 10 7 0 2.33
Buffalo Wild Wings 1 17 5 0 2.17

Texas Roadhouse presently has a consensus target price of $50.24, suggesting a potential upside of 4.40%. Buffalo Wild Wings has a consensus target price of $138.78, suggesting a potential upside of 32.11%. Given Buffalo Wild Wings’ higher possible upside, analysts clearly believe Buffalo Wild Wings is more favorable than Texas Roadhouse.

Risk & Volatility

Texas Roadhouse has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, Buffalo Wild Wings has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500.

Summary

Texas Roadhouse beats Buffalo Wild Wings on 10 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.

Buffalo Wild Wings Company Profile

Buffalo Wild Wings, Inc. is the owner, operator and franchisor of restaurants. As of December 25, 2016, the Company’s made-to-order menu items included 16 sauces and five seasonings, ranging from Sweet BBQ to Blazin. The Company’s restaurants offer 20 to 40 domestic and imported beers on tap, including craft brews, and a selection of bottled beers, wines and liquor. As of December 25, 2016, the Company had company-owned or franchised restaurants in all 50 states and two Canadian provinces. Its franchised restaurants also operate in Mexico, Saudi Arabia, Philippines, Panama and the United Arab Emirates. The Company operates Buffalo Wild Wings, R Taco and PizzaRev restaurants, as well as sells Buffalo Wild Wings and R Taco restaurant franchises. In addition to traditional and boneless chicken wings, the Company’s menu features a range of food items, including sharables, hamburgers, sandwiches, wraps, Buffalito soft tacos, and salads.

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