Yum! Brands (NYSE: YUM) and Carrols Restaurant Group (NASDAQ:TAST) are both retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Analyst Ratings

This is a summary of recent recommendations for Yum! Brands and Carrols Restaurant Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yum! Brands 0 14 11 0 2.44
Carrols Restaurant Group 0 0 1 1 3.50

Yum! Brands presently has a consensus price target of $79.29, suggesting a potential upside of 4.36%. Carrols Restaurant Group has a consensus price target of $16.50, suggesting a potential upside of 41.63%. Given Carrols Restaurant Group’s stronger consensus rating and higher probable upside, analysts clearly believe Carrols Restaurant Group is more favorable than Yum! Brands.

Dividends

Yum! Brands pays an annual dividend of $1.20 per share and has a dividend yield of 1.6%. Carrols Restaurant Group does not pay a dividend. Yum! Brands pays out 33.1% of its earnings in the form of a dividend. Carrols Restaurant Group has increased its dividend for 8 consecutive years.

Institutional & Insider Ownership

72.0% of Yum! Brands shares are owned by institutional investors. Comparatively, 86.8% of Carrols Restaurant Group shares are owned by institutional investors. 7.4% of Yum! Brands shares are owned by company insiders. Comparatively, 5.3% of Carrols Restaurant Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Yum! Brands and Carrols Restaurant Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yum! Brands 16.76% -24.95% 18.16%
Carrols Restaurant Group 3.44% 6.33% 1.86%

Valuation & Earnings

This table compares Yum! Brands and Carrols Restaurant Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Yum! Brands $6.28 billion 4.17 $2.04 billion $3.62 20.99
Carrols Restaurant Group $999.03 million 0.41 $80.24 million $0.72 16.18

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

Risk and Volatility

Yum! Brands has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500. Comparatively, Carrols Restaurant Group has a beta of 0.04, suggesting that its share price is 96% less volatile than the S&P 500.

Summary

Yum! Brands beats Carrols Restaurant Group on 10 of the 18 factors compared between the two stocks.

Yum! Brands Company Profile

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.

Carrols Restaurant Group Company Profile

Carrols Restaurant Group, Inc. is a holding company and conducts all of its operations through its subsidiary, Carrols Corporation (Carrols) and Carrols’ subsidiary, Carrols LLC. The Company is a restaurant company and Burger King franchisee in the United States. As of January 1, 2017, the Company had owned and operated 753 Burger King restaurants under the name Burger King in 16 Northeastern, Midwestern and Southeastern states. Burger King restaurants feature the flame-broiled Whopper sandwich, as well as a range of hamburgers, chicken and other specialty sandwiches, French fries, salads, breakfast items, hot dogs, snacks, smoothies, frappes and other offerings. The Company’s Burger King restaurants are located in various states, such as Illinois, Indiana, Kentucky, Maine, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Vermont, Virginia and West Virginia.

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