Analyzing CEC Entertainment (CEC) & Yum! Brands (YUM)

Yum! Brands (NYSE: YUM) and CEC Entertainment (NYSE:CEC) are both cyclical consumer goods & services companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, valuation, dividends, profitability and analyst recommendations.

Institutional and Insider Ownership

73.2% of Yum! Brands shares are owned by institutional investors. 0.7% of Yum! Brands shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Yum! Brands and CEC Entertainment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yum! Brands 0 13 10 0 2.43
CEC Entertainment 0 0 0 0 N/A

Yum! Brands presently has a consensus target price of $81.38, indicating a potential upside of 4.64%.

Profitability

This table compares Yum! Brands and CEC Entertainment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yum! Brands 22.80% -17.27% 19.56%
CEC Entertainment N/A N/A N/A

Dividends

Yum! Brands pays an annual dividend of $1.20 per share and has a dividend yield of 1.5%. CEC Entertainment does not pay a dividend. Yum! Brands pays out 31.7% of its earnings in the form of a dividend.

Risk and Volatility

Yum! Brands has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500. Comparatively, CEC Entertainment has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Earnings and Valuation

This table compares Yum! Brands and CEC Entertainment’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Yum! Brands $5.88 billion 4.46 $1.34 billion $3.79 20.52
CEC Entertainment N/A N/A N/A $2.73 N/A

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

Summary

Yum! Brands beats CEC Entertainment on 9 of the 11 factors compared between the two stocks.

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.

About CEC Entertainment

CEC Entertainment, Inc. is engaged in the family dining and entertainment center business. The Company develops, operates and franchises family dining and entertainment centers under the name Chuck E. Cheese’s. Chuck E. Cheese’s stores feature musical and comic entertainment by robotic and animated characters, arcade-style and skill-oriented games, video games, rides and other activities. All of its stores offer dining selections consisting of a range of beverages, pizzas, sandwiches, appetizers, a salad bar and desserts. As of January 1, 2012, the Company and its franchisees operated a total of 556 Chuck E. Cheese’s stores. As of January 1, 2012, it operated 507 Company-owned Chuck E. Cheese’s stores located in 44 states and Canada and its franchisees operated a total of 49 stores located in 15 states, Puerto Rico, Guam, Guatemala, Chile, Saudi Arabia and the United Arab Emirates. In February 2014, Apollo Global Management, LLC completed the acquisition of CEC Entertainment Inc.

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