Critical Contrast: Mitchells & Butlers (OTCMKTS:MBPFF) & Wendy’s (NASDAQ:WEN)

Wendy’s (NASDAQ:WEN) and Mitchells & Butlers (OTCMKTS:MBPFF) are both small-cap retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.

Earnings and Valuation

This table compares Wendy’s and Mitchells & Butlers”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wendy’s	$2.21 billion	0.70	$194.36 million	$0.94	8.63
Mitchells & Butlers	$3.54 billion	0.55	$231.13 million	N/A	N/A

Mitchells & Butlers has higher revenue and earnings than Wendy’s.

Analyst Ratings

This is a summary of recent recommendations for Wendy’s and Mitchells & Butlers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wendy’s	5	17	4	1	2.04
Mitchells & Butlers	0	0	0	0	0.00

Wendy’s currently has a consensus target price of $10.57, suggesting a potential upside of 30.31%. Given Wendy’s’ stronger consensus rating and higher probable upside, research analysts plainly believe Wendy’s is more favorable than Mitchells & Butlers.

Volatility & Risk

Wendy’s has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500. Comparatively, Mitchells & Butlers has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500.

Profitability

This table compares Wendy’s and Mitchells & Butlers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wendy’s	8.43%	125.74%	3.88%
Mitchells & Butlers	N/A	N/A	N/A

Insider and Institutional Ownership

86.0% of Wendy’s shares are owned by institutional investors. 17.0% of Wendy’s 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

Wendy’s beats Mitchells & Butlers on 10 of the 13 factors compared between the two stocks.

About Wendy’s

The Wendy’s Co. engages in operating, developing, and franchising a system of quick-service restaurants. It operates through the following segments: Wendy’s U.S., Wendy’s International, and Global Real Estate and Development. The Wendy’s U.S. segment includes the operation and franchising of Wendy’s restaurants in the U.S. The Wendy’s International segment is involved in the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. The Global Real Estate and Development segment focuses on real estate activity for owned sites and sites leased from third parties. The company was founded by R. David Thomas on November 15, 1969 and is headquartered in Dublin, OH.

About Mitchells & Butlers

Mitchells & Butlers plc engages in the management of pubs, bars, and restaurants in the United Kingdom and Germany. The company operates its pubs and restaurants under the Alex, All Bar One, Browns, Castle, EGO, Ember Inns, Harvester, High Street, Innkeeper's Lodge, Miller & Carter, Nicholson's, O'Neill's, Premium Country Pubs, Sizzling Pubs, Suburban, Stonehouse Pizza & Carvery, Toby Carvery, and Vintage Inns brands and formats. It also engages in the leisure retailing; property leasing, property management, and development; and financing activities, as well as operates as a healthcare trustee. In addition, the company owns various trademarks. The company was founded in 1898 and is headquartered in Birmingham, the United Kingdom.