El Pollo Loco Holdings (NASDAQ: LOCO) and Denny’s Corporation (NASDAQ:DENN) are both small-cap retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, risk, institutional ownership, valuation, dividends and earnings.
Volatility & Risk
El Pollo Loco Holdings has a beta of 0.35, suggesting that its share price is 65% less volatile than the S&P 500. Comparatively, Denny’s Corporation has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500.
Institutional and Insider Ownership
76.8% of El Pollo Loco Holdings shares are held by institutional investors. Comparatively, 92.4% of Denny’s Corporation shares are held by institutional investors. 45.9% of El Pollo Loco Holdings shares are held by insiders. Comparatively, 5.2% of Denny’s Corporation shares are held by 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.
This is a summary of recent recommendations for El Pollo Loco Holdings and Denny’s Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|El Pollo Loco Holdings||0||3||1||0||2.25|
El Pollo Loco Holdings presently has a consensus price target of $13.00, indicating a potential upside of 28.71%. Denny’s Corporation has a consensus price target of $12.67, indicating a potential upside of 2.98%. Given El Pollo Loco Holdings’ higher probable upside, equities research analysts plainly believe El Pollo Loco Holdings is more favorable than Denny’s Corporation.
This table compares El Pollo Loco Holdings and Denny’s Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|El Pollo Loco Holdings||2.27%||9.14%||5.37%|
Earnings and Valuation
This table compares El Pollo Loco Holdings and Denny’s Corporation’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|El Pollo Loco Holdings||$380.12 million||1.03||$18.33 million||$0.22||45.91|
|Denny’s Corporation||$506.95 million||1.58||$19.40 million||$0.52||23.65|
Denny’s Corporation has higher revenue and earnings than El Pollo Loco Holdings. Denny’s Corporation is trading at a lower price-to-earnings ratio than El Pollo Loco Holdings, indicating that it is currently the more affordable of the two stocks.
Denny’s Corporation beats El Pollo Loco Holdings on 10 of the 13 factors compared between the two stocks.
About El Pollo Loco Holdings
El Pollo Loco Holdings, Inc. specializes in fire-grilling citrus-marinated chicken and operates in the limited service restaurant (LSR) segment. The Company’s menu features its signature product, citrus-marinated fire-grilled chicken, and a range of Mexican-inspired entrees that it creates from chicken. Every day in every restaurant, the Company marinates and fire-grills its chicken over open flames, and hand-slices whole tomatoes, avocados, serrano peppers and cilantro to make its salsas, guacamole and cilantro dressings from scratch. The Company also offers burritos, salads, tostadas, bowls, stuffed quesadillas and chicken entrees. The Company’s entrees include Chicken Avocado Burrito, Under 500 Calorie entrees, Ultimate Pollo Bowl, and Stuffed Chicken Avocado Quesadilla. As of December 28, 2016, the Company had 460 restaurants, consisting of 201 Company-operated and 259 franchised restaurants. The Company also offers additional proteins, such as shrimp, carnitas and beef.
About Denny’s Corporation
Denny’s Corporation (Denny’s) operates a franchised full-service restaurant chain. The Company, through its subsidiary, Denny’s, Inc., owns and operates the Denny’s brand. As of December 28, 2016, the Denny’s brand consisted of 1,733 franchised, licensed and Company-operated restaurants around the world, including 1,610 restaurants in the United States and 123 international locations. As of December 28, 2016, 1,564 of its restaurants were franchised or licensed and 169 were Company-operated. In addition to its breakfast-all-day items, Denny’s offers a selection of lunch and dinner items, including burgers, sandwiches, salads and skillet entrees, along with an assortment of beverages, appetizers and desserts. The Company’s Fit Fare menu helps its guests identify items suited to their dietary needs. Most Denny’s restaurants offer special items for children and seniors. The Company has restaurant locations within travel centers, primarily with Pilot and Pilot Flying J Travel Centers.
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