Del Frisco’s Restaurant Group (NASDAQ: DFRG) and Darden Restaurants (NYSE:DRI) are both retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Profitability

This table compares Del Frisco’s Restaurant Group and Darden Restaurants’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Del Frisco’s Restaurant Group 3.73% 7.39% 4.77%
Darden Restaurants 6.60% 26.06% 10.47%

Dividends

Darden Restaurants pays an annual dividend of $2.52 per share and has a dividend yield of 3.2%. Del Frisco’s Restaurant Group does not pay a dividend. Darden Restaurants pays out 65.1% of its earnings in the form of a dividend.

Insider & Institutional Ownership

99.2% of Del Frisco’s Restaurant Group shares are owned by institutional investors. Comparatively, 88.7% of Darden Restaurants shares are owned by institutional investors. 2.4% of Del Frisco’s Restaurant Group shares are owned by insiders. Comparatively, 0.6% of Darden Restaurants shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Del Frisco’s Restaurant Group and Darden Restaurants’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Del Frisco’s Restaurant Group $356.76 million 0.87 $41.74 million $0.56 26.25
Darden Restaurants $7.39 billion 1.35 $969.50 million $3.87 20.60

Darden Restaurants has higher revenue and earnings than Del Frisco’s Restaurant Group. Darden Restaurants is trading at a lower price-to-earnings ratio than Del Frisco’s Restaurant Group, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Del Frisco’s Restaurant Group has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500. Comparatively, Darden Restaurants has a beta of 0.24, indicating that its stock price is 76% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Del Frisco’s Restaurant Group and Darden Restaurants, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Del Frisco’s Restaurant Group 0 3 2 0 2.40
Darden Restaurants 1 12 10 0 2.39

Del Frisco’s Restaurant Group presently has a consensus target price of $18.10, suggesting a potential upside of 23.13%. Darden Restaurants has a consensus target price of $87.52, suggesting a potential upside of 9.79%. Given Del Frisco’s Restaurant Group’s stronger consensus rating and higher probable upside, analysts plainly believe Del Frisco’s Restaurant Group is more favorable than Darden Restaurants.

Summary

Darden Restaurants beats Del Frisco’s Restaurant Group on 9 of the 16 factors compared between the two stocks.

Del Frisco’s Restaurant Group Company Profile

Del Frisco’s Restaurant Group, Inc. develops, owns and operates three contemporary, complementary restaurants: Del Frisco’s Double Eagle Steak House (Del Frisco’s), Sullivan’s Steakhouse (Sullivan’s) and Del Frisco’s Grille (the Grille). As of December 27, 2016, the Company operated 53 restaurants in 24 states and the District of Columbia in the United States. The Company’s segments include Del Frisco’s, Sullivan’s and the Grille. Del Frisco’s is a steakhouse concept in the United States. The Del Frisco’s brand’s menu includes the United States Department of Agriculture (USDA) Prime grade, wet-aged steaks hand-cut at the time of order and a range of other offerings, including prime lamb, fresh seafood, and signature side dishes and desserts. Each restaurant has a sommelier to guide diners through a wine list. As of December 27, 2016, the Company operated 12 Del Frisco’s steakhouses in nine states and the District of Columbia. Sullivan’s is a complementary concept to Del Frisco’s.

Darden Restaurants Company Profile

Darden Restaurants, Inc. is a full-service restaurant company. The Company owned and operated 1,536 restaurants through its subsidiaries in the United States and Canada, as of May 29, 2016. The Company’s segments include Olive Garden, LongHorn Steakhouse, Fine Dining (which includes The Capital Grille, and Eddie V’s Prime Seafood and Wildfish Seafood Grille (Eddie V’s)) and Other Business (which includes Yard House, Seasons 52, Bahama Breeze, consumer-packaged goods and franchise revenues). As of May 29, 2016, the Company also had 50 restaurants operated by independent third parties pursuant to area development and franchise agreements. Olive Garden’s menu includes a range of authentic Italian foods featuring fresh ingredients and a selection of imported Italian wines. LongHorn Steakhouse restaurants feature a range of menu items, including fresh steaks and chicken, as well as salmon, shrimp, ribs, pork chops, burgers and prime rib.

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