Critical Analysis: J Alexanders (JAX) versus Darden Restaurants (DRI)

J Alexanders (NYSE:JAX) and Darden Restaurants (NYSE:DRI) are both retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, risk and dividends.

Analyst Ratings

This is a summary of current ratings and recommmendations for J Alexanders and Darden Restaurants, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
J Alexanders 0 0 0 0 N/A
Darden Restaurants 2 8 16 0 2.54

Darden Restaurants has a consensus price target of $119.29, indicating a potential upside of 7.92%. Given Darden Restaurants’ higher probable upside, analysts clearly believe Darden Restaurants is more favorable than J Alexanders.

Volatility & Risk

J Alexanders has a beta of 0.28, indicating that its stock price is 72% less volatile than the S&P 500. Comparatively, Darden Restaurants has a beta of 0.17, indicating that its stock price is 83% less volatile than the S&P 500.

Earnings & Valuation

This table compares J Alexanders and Darden Restaurants’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
J Alexanders $233.26 million 0.64 $7.33 million $0.53 19.28
Darden Restaurants $8.08 billion 1.70 $596.00 million $4.81 22.98

Darden Restaurants has higher revenue and earnings than J Alexanders. J Alexanders is trading at a lower price-to-earnings ratio than Darden Restaurants, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares J Alexanders and Darden Restaurants’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
J Alexanders 3.50% 7.49% 5.22%
Darden Restaurants 7.84% 30.32% 11.95%

Dividends

Darden Restaurants pays an annual dividend of $1.26 per share and has a dividend yield of 1.1%. J Alexanders does not pay a dividend. Darden Restaurants pays out 26.2% of its earnings in the form of a dividend.

Insider & Institutional Ownership

73.9% of J Alexanders shares are owned by institutional investors. Comparatively, 88.9% of Darden Restaurants shares are owned by institutional investors. 15.0% of J Alexanders shares are owned by insiders. Comparatively, 0.7% of Darden Restaurants shares are owned by 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.

Summary

Darden Restaurants beats J Alexanders on 12 of the 15 factors compared between the two stocks.

About J Alexanders

J. Alexander's Holdings, Inc., through its subsidiaries, owns and operates full service restaurants in the United States. It operates four complementary upscale dining restaurant concepts, including J. Alexander's, Redlands Grill, Lyndhurst Grill, and Stoney River Steakhouse and Grill (Stoney River). The company's restaurants offer American menu. As of September 19, 2018, it operated 45 restaurants in 16 states. J. Alexander's Holdings, Inc. was founded in 1970 and is headquartered in Nashville, Tennessee.

About Darden Restaurants

Darden Restaurants, Inc., through its subsidiaries, owns and operates full-service restaurants in the United States and Canada. As of May 27, 2018, it owned and operated approximately 1,746 restaurants under the Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Bahama Breeze, Seasons 52, and Eddie V's brands. The company was founded in 1968 and is based in Orlando, Florida.

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