Domino’s Pizza (NASDAQ:DPZ) and Darden Restaurants (NYSE:DRI) Head to Head Analysis

Darden Restaurants (NYSE:DRI) and Domino’s Pizza (NASDAQ:DPZ) are both large-cap retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, earnings, institutional ownership, valuation and dividends.

Profitability

This table compares Darden Restaurants and Domino’s Pizza’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Darden Restaurants	8.69%	51.81%	9.23%
Domino’s Pizza	12.49%	-15.09%	33.17%

Institutional and Insider Ownership

93.6% of Darden Restaurants shares are owned by institutional investors. Comparatively, 94.6% of Domino’s Pizza shares are owned by institutional investors. 0.6% of Darden Restaurants shares are owned by company insiders. Comparatively, 0.8% of Domino’s Pizza shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and price targets for Darden Restaurants and Domino’s Pizza, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Darden Restaurants	0	11	16	0	2.59
Domino’s Pizza	2	10	15	1	2.54

Darden Restaurants currently has a consensus price target of $225.19, suggesting a potential upside of 10.16%. Domino’s Pizza has a consensus price target of $491.52, suggesting a potential upside of 1.23%. Given Darden Restaurants’ stronger consensus rating and higher probable upside, equities analysts clearly believe Darden Restaurants is more favorable than Domino’s Pizza.

Dividends

Darden Restaurants pays an annual dividend of $6.00 per share and has a dividend yield of 2.9%. Domino’s Pizza pays an annual dividend of $6.96 per share and has a dividend yield of 1.4%. Darden Restaurants pays out 67.6% of its earnings in the form of a dividend. Domino’s Pizza pays out 40.4% 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. Darden Restaurants has increased its dividend for 4 consecutive years and Domino’s Pizza has increased its dividend for 12 consecutive years.

Earnings and Valuation

This table compares Darden Restaurants and Domino’s Pizza”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Darden Restaurants	$12.08 billion	1.98	$1.05 billion	$8.88	23.02
Domino’s Pizza	$4.71 billion	3.50	$584.17 million	$17.22	28.20

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

Volatility & Risk

Darden Restaurants has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, Domino’s Pizza has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.

Summary

Domino’s Pizza beats Darden Restaurants on 11 of the 18 factors compared between the two stocks.

About Darden Restaurants

Darden Restaurants, Inc., together with its subsidiaries, owns and operates full-service restaurants in the United States and Canada. It operates under Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s Prime Seafood, and Capital Burger brand names. Darden Restaurants, Inc. was incorporated in 1995 and is based in Orlando, Florida.

About Domino’s Pizza

Domino’s Pizza, Inc., through its subsidiaries, operates as a pizza company in the United States and internationally. The company operates through three segments: U.S. Stores, International Franchise, and Supply Chain. It offers pizzas under the Domino’s brand name through company-owned and franchised stores. It also provides oven-baked sandwiches, pastas, boneless chicken and chicken wings, breads and dips, desserts, and soft drink products, as well as loaded tots and pepperoni stuffed cheesy breads. Domino’s Pizza, Inc. was founded in 1960 and is headquartered in Ann Arbor, Michigan.