Noodles & (NASDAQ: NDLS) and Yum! Brands (NYSE:YUM) are both retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Risk and Volatility

Noodles & has a beta of -0.52, indicating that its stock price is 152% less volatile than the S&P 500. Comparatively, Yum! Brands has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.

Earnings and Valuation

This table compares Noodles & and Yum! Brands’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Noodles & $481.59 million 0.36 $12.41 million ($3.19) -1.36
Yum! Brands $6.28 billion 4.09 $2.04 billion $3.62 20.57

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

Analyst Ratings

This is a summary of current ratings and recommmendations for Noodles & and Yum! Brands, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Noodles & 1 6 0 0 1.86
Yum! Brands 0 10 11 0 2.52

Noodles & presently has a consensus price target of $4.79, suggesting a potential upside of 10.02%. Yum! Brands has a consensus price target of $78.05, suggesting a potential upside of 4.84%. Given Noodles &’s higher probable upside, equities research analysts clearly believe Noodles & is more favorable than Yum! Brands.

Profitability

This table compares Noodles & and Yum! Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Noodles & -17.42% -10.25% -2.10%
Yum! Brands 16.76% -24.95% 18.16%

Dividends

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

Institutional & Insider Ownership

66.2% of Noodles & shares are owned by institutional investors. Comparatively, 72.0% of Yum! Brands shares are owned by institutional investors. 52.7% of Noodles & shares are owned by insiders. Comparatively, 0.7% of Yum! Brands shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Yum! Brands beats Noodles & on 12 of the 16 factors compared between the two stocks.

About Noodles &

Noodles & Company develops and operates fast casual restaurants. The Company’s menu includes a range of cooked-to-order dishes, including noodles and pasta, soups, salads, sandwiches and appetizers. The Company has approximately 490 restaurants, including 420 Company-owned and 70 franchised locations, across 40 states, the District of Columbia and one Canadian province. The Company offers over 30 globally inspired Asian, Mediterranean and American dishes together on a single menu. The Company offers approximately 10 fresh vegetables and six proteins, including marinated steak, naturally raised pork, chicken, meatballs, shrimp and organic tofu. The Company offers Kids Meals, which includes sides, such as broccoli, carrots, fruit, applesauce and a portion of its housemade rice crispy treat. The Company’s restaurants’ locations include Arizona, California, Colorado, Delaware, New York, North Dakota, Ohio, Texas, Utah, Virginia, Washington and Wisconsin.

About Yum! Brands

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.

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