DineEquity (NYSE: DIN) and Biglari (NYSE:BH) are both small-cap cyclical consumer goods & services companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, institutional ownership and valuation.
Institutional & Insider Ownership
92.6% of DineEquity shares are owned by institutional investors. Comparatively, 87.5% of Biglari shares are owned by institutional investors. 2.2% of DineEquity shares are owned by company insiders. Comparatively, 51.2% of Biglari shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This is a summary of current ratings and recommmendations for DineEquity and Biglari, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
DineEquity currently has a consensus target price of $58.75, suggesting a potential upside of 7.94%. Given DineEquity’s higher possible upside, equities research analysts plainly believe DineEquity is more favorable than Biglari.
DineEquity pays an annual dividend of $3.88 per share and has a dividend yield of 7.1%. Biglari does not pay a dividend. DineEquity pays out -17.7% of its earnings in the form of a dividend. Biglari has raised its dividend for 3 consecutive years.
This table compares DineEquity and Biglari’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings and Valuation
This table compares DineEquity and Biglari’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|DineEquity||$633.97 million||1.54||$97.99 million||($21.88)||-2.49|
|Biglari||$850.08 million||0.95||$99.45 million||$42.31||9.24|
Biglari has higher revenue and earnings than DineEquity. DineEquity is trading at a lower price-to-earnings ratio than Biglari, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
DineEquity has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500. Comparatively, Biglari has a beta of 0.41, indicating that its stock price is 59% less volatile than the S&P 500.
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.
Biglari Holdings Inc. is a holding company owning subsidiaries engaged in various business activities, including media, property and casualty insurance, and restaurants The Company’s segments include Restaurant Operations, First Guard, Maxim, Other and Corporate. The Company’s restaurant operations’ activities are conducted through approximately two restaurant concepts operated by subsidiaries Steak n Shake Inc. (Steak n Shake) and Western Sizzlin Corporation (Western). Steak n Shake is engaged in the ownership, operation and franchising of Steak n Shake restaurants. Western is engaged primarily in the franchising of restaurants. The Company’s insurance business consists of First Guard Insurance Company and its agency, 1st Guard Corporation. First Guard is a direct underwriter of commercial trucking insurance, selling physical damage and non-trucking liability insurance to truckers. Its media business consists of Maxim. Maxim’s business lies principally in media and licensing.
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