Critical Analysis: Starbucks (NASDAQ:SBUX) vs. Portillo’s (NASDAQ:PTLO)

Portillo’s (NASDAQ:PTLO) and Starbucks (NASDAQ:SBUX) are both retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, profitability, risk, earnings, institutional ownership, analyst recommendations and dividends.

Volatility and Risk

Portillo’s has a beta of 1.73, indicating that its share price is 73% more volatile than the S&P 500. Comparatively, Starbucks has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Portillo’s and Starbucks, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Portillo’s	1	7	4	0	2.25
Starbucks	2	11	15	1	2.52

Portillo’s presently has a consensus price target of $9.78, indicating a potential upside of 87.67%. Starbucks has a consensus price target of $101.44, indicating a potential upside of 17.00%. Given Portillo’s’ higher possible upside, analysts clearly believe Portillo’s is more favorable than Starbucks.

Profitability

This table compares Portillo’s and Starbucks’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Portillo’s	3.35%	4.99%	1.59%
Starbucks	4.99%	-31.84%	7.46%

Insider & Institutional Ownership

98.3% of Portillo’s shares are held by institutional investors. Comparatively, 72.3% of Starbucks shares are held by institutional investors. 6.1% of Portillo’s shares are held by insiders. Comparatively, 0.1% of Starbucks shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Portillo’s and Starbucks”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Portillo’s	$710.55 million	0.55	$29.52 million	$0.36	14.47
Starbucks	$37.18 billion	2.65	$3.76 billion	$1.64	52.87

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

Summary

Starbucks beats Portillo’s on 10 of the 15 factors compared between the two stocks.

About Portillo’s

Portillo’s Inc. owns and operates fast casual restaurants in the United States. The company offers Chicago-style hot dogs and sausages, Italian beef sandwiches, char-grilled burgers, chopped salads, crinkle-cut French fries, homemade chocolate cakes, and chocolate cake shake. It offers its products through its website, application, and certain third-party platforms. Portillo’s Inc. was founded in 1963 and is based in Oak Brook, Illinois.

About Starbucks

Starbucks Corporation, together with its subsidiaries, operates as a roaster, marketer, and retailer of coffee worldwide. The company operates through three segments: North America, International, and Channel Development. Its stores offer coffee and tea beverages, roasted whole beans and ground coffees, single serve products, and ready-to-drink beverages; and various food products, such as pastries, breakfast sandwiches, and lunch items. The company also licenses its trademarks through licensed stores, and grocery and foodservice accounts. The company offers its products under the Starbucks Coffee, Teavana, Seattle’s Best Coffee, Ethos, Starbucks Reserve, and Princi brands. Starbucks Corporation was founded in 1971 and is based in Seattle, Washington.