Analyzing Dine Brands Global (DIN) and Cheesecake Factory (CAKE)

Dine Brands Global (NYSE:DIN) and Cheesecake Factory (NASDAQ:CAKE) are both retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, dividends, institutional ownership, risk, earnings, profitability and analyst recommendations.

Profitability

This table compares Dine Brands Global and Cheesecake Factory’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dine Brands Global 19.41% -40.87% 4.88%
Cheesecake Factory 6.02% 18.02% 8.38%

Earnings & Valuation

This table compares Dine Brands Global and Cheesecake Factory’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dine Brands Global $604.82 million 2.73 -$330.53 million $4.15 22.51
Cheesecake Factory $2.26 billion 1.06 $157.39 million $2.60 20.12

Cheesecake Factory has higher revenue and earnings than Dine Brands Global. Cheesecake Factory is trading at a lower price-to-earnings ratio than Dine Brands Global, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations for Dine Brands Global and Cheesecake Factory, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dine Brands Global 0 1 2 0 2.67
Cheesecake Factory 0 14 1 0 2.07

Dine Brands Global currently has a consensus price target of $111.50, suggesting a potential upside of 19.38%. Cheesecake Factory has a consensus price target of $52.93, suggesting a potential upside of 1.18%. Given Dine Brands Global’s stronger consensus rating and higher probable upside, analysts plainly believe Dine Brands Global is more favorable than Cheesecake Factory.

Volatility and Risk

Dine Brands Global has a beta of -0.06, suggesting that its stock price is 106% less volatile than the S&P 500. Comparatively, Cheesecake Factory has a beta of 0.33, suggesting that its stock price is 67% less volatile than the S&P 500.

Dividends

Dine Brands Global pays an annual dividend of $2.52 per share and has a dividend yield of 2.7%. Cheesecake Factory pays an annual dividend of $1.32 per share and has a dividend yield of 2.5%. Dine Brands Global pays out 60.7% of its earnings in the form of a dividend. Cheesecake Factory pays out 50.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Dine Brands Global has increased its dividend for 3 consecutive years and Cheesecake Factory has increased its dividend for 5 consecutive years.

Summary

Dine Brands Global beats Cheesecake Factory on 8 of the 15 factors compared between the two stocks.

About Dine Brands Global

Dine Brands Global, Inc., together with its subsidiaries, owns, franchises, operates, and rents full-service restaurants in the United States and internationally. It operates through four segments: Franchise Operations, Rental Operations, Company Restaurant Operations, and Financing Operations. The company owns and franchises two restaurant concepts, including Applebee's Neighborhood Grill & Bar (Applebee's) in the bar and grill segment of the casual dining category of the restaurant industry; and International House of Pancakes (IHOP) in the family dining category of the restaurant industry. Its Applebee's restaurants offer casual food, drinks, casual dining, and table services; and IHOP restaurants provide full table services, and food and beverage offerings. As of December 31, 2017, the company had 1,936 Applebee's franchised restaurants, and 1,786 IHOP franchised and area licensed restaurants. It is also involved in the lease or sublease of 693 IHOP franchised restaurants and 1 Applebee's franchised restaurant. The company was formerly known as DineEquity, Inc. and changed its name to Dine Brands Global, Inc. in February 2018. Dine Brands Global, Inc. was founded in 1958 and is headquartered in Glendale, California.

About Cheesecake Factory

The Cheesecake Factory Incorporated operates restaurants in the United States. The company produces cheesecakes and other baked products for own restaurants and international licensees, as well as external foodservice operators, retailers, and distributors. As of August 21, 2018, it operated 215 company-owned restaurants, including 199 restaurants under The Cheesecake Factory brand; 14 restaurants under the Grand Lux Cafe brand; and 2 restaurants under the RockSugar Southeast Asian Kitchen brand, as well as 21 The Cheesecake Factory branded restaurants under licensing agreements internationally. The company was founded in 1972 and is headquartered in Calabasas, California.

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