Contrasting Wendy’s (NASDAQ:WEN) and Sweetgreen (NYSE:SG)

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

Profitability

This table compares Sweetgreen and Wendy’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sweetgreen	2.49%	-33.07%	-16.37%
Wendy’s	6.77%	136.46%	3.14%

Insider and Institutional Ownership

95.8% of Sweetgreen shares are owned by institutional investors. Comparatively, 86.0% of Wendy’s shares are owned by institutional investors. 18.2% of Sweetgreen shares are owned by company insiders. Comparatively, 17.1% of Wendy’s shares are owned by company 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.

Volatility and Risk

Sweetgreen has a beta of 2.17, meaning that its share price is 117% more volatile than the S&P 500. Comparatively, Wendy’s has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Sweetgreen and Wendy’s, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sweetgreen	3	11	4	0	2.06
Wendy’s	6	13	5	0	1.96

Sweetgreen currently has a consensus price target of $7.57, suggesting a potential downside of 13.47%. Wendy’s has a consensus price target of $8.56, suggesting a potential downside of 0.37%. Given Wendy’s’ higher possible upside, analysts plainly believe Wendy’s is more favorable than Sweetgreen.

Earnings & Valuation

This table compares Sweetgreen and Wendy’s”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sweetgreen	$679.47 million	1.53	-$134.07 million	$0.12	72.93
Wendy’s	$2.18 billion	0.75	$165.07 million	$0.78	11.01

Wendy’s has higher revenue and earnings than Sweetgreen. Wendy’s is trading at a lower price-to-earnings ratio than Sweetgreen, indicating that it is currently the more affordable of the two stocks.

Summary

Wendy’s beats Sweetgreen on 8 of the 14 factors compared between the two stocks.

About Sweetgreen

Sweetgreen, Inc., together with its subsidiaries, operates fast food restaurants serving healthy foods at scale in the United States. The company also accepts orders through its online and mobile ordering platforms, as well as sells gift cards that do not have an expiration date and can be redeemed. The company was founded in 2006 and is headquartered in Los Angeles, California.

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.