Contrasting Dine Brands Global (NYSE:DIN) and Brinker International (NYSE:EAT)

Brinker International (NYSE:EAT) and Dine Brands Global (NYSE:DIN) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Brinker International and Dine Brands Global, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brinker International 1 10 13 0 2.50
Dine Brands Global 0 3 5 0 2.63

Brinker International presently has a consensus price target of $36.43, suggesting a potential upside of 35.47%. Dine Brands Global has a consensus price target of $79.43, suggesting a potential upside of 74.84%. Given Dine Brands Global’s stronger consensus rating and higher possible upside, analysts clearly believe Dine Brands Global is more favorable than Brinker International.

Profitability

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

Net Margins Return on Equity Return on Assets
Brinker International 3.62% -24.65% 6.99%
Dine Brands Global -8.13% -24.91% 3.27%

Dividends

Brinker International pays an annual dividend of $1.52 per share and has a dividend yield of 5.7%. Dine Brands Global pays an annual dividend of $3.04 per share and has a dividend yield of 6.7%. Brinker International pays out 38.7% of its earnings in the form of a dividend. Dine Brands Global pays out 43.7% 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. Brinker International has increased its dividend for 8 consecutive years and Dine Brands Global has increased its dividend for 1 consecutive years.

Institutional and Insider Ownership

79.3% of Brinker International shares are owned by institutional investors. Comparatively, 90.1% of Dine Brands Global shares are owned by institutional investors. 3.5% of Brinker International shares are owned by insiders. Comparatively, 2.8% of Dine Brands Global shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Brinker International $3.22 billion 0.38 $154.90 million $3.93 6.84
Dine Brands Global $910.18 million 0.82 $104.35 million $6.95 6.54

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

Volatility & Risk

Brinker International has a beta of 2.21, suggesting that its stock price is 121% more volatile than the S&P 500. Comparatively, Dine Brands Global has a beta of 1.72, suggesting that its stock price is 72% more volatile than the S&P 500.

Summary

Brinker International beats Dine Brands Global on 11 of the 17 factors compared between the two stocks.

About Brinker International

Brinker International, Inc., together with its subsidiaries, owns, develops, operates, and franchises casual dining restaurants in the United States and internationally. As of June 27, 2018, it owned, operated, or franchised 1,686 restaurants comprising 997 company-owned restaurants and 689 franchised restaurants under the Chili's Grill & Bar and Maggiano's Little Italy brand names. The company was founded in 1975 and is based in Dallas, Texas.

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 in five segments: Applebee's Franchise Operations, IHOP Franchise Operations, Rental Operations, Financing Operations, and Company-Operated Restaurant 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; and International House of Pancakes (IHOP) in the family dining category of the restaurant industry. Its Applebee's restaurants offer American fare with drinks and drafts; and IHOP restaurants provide full table services, and food and beverage offerings. As of December 31, 2018, the company had 1,768 Applebee's franchised restaurants, and 1,831 IHOP franchised and area licensed restaurants. It is also involved in the lease or sublease of 676 IHOP franchised restaurants and 1 Applebee's franchised restaurant; and the financing of franchise fees and equipment leases. 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 based in Glendale, California.

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