Contrasting Pizza Pizza Royalty (OTCMKTS:PZRIF) & McDonald’s (NYSE:MCD)

McDonald’s (NYSE:MCD) and Pizza Pizza Royalty (OTCMKTS:PZRIF) are both consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.

Institutional and Insider Ownership

70.3% of McDonald’s shares are held by institutional investors. Comparatively, 35.5% of Pizza Pizza Royalty shares are held by institutional investors. 0.3% of McDonald’s shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

McDonald’s pays an annual dividend of $7.44 per share and has a dividend yield of 2.9%. Pizza Pizza Royalty pays an annual dividend of $0.79 per share and has a dividend yield of 9.2%. McDonald’s pays out 60.4% of its earnings in the form of a dividend. Pizza Pizza Royalty pays out 97.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. McDonald’s has increased its dividend for 49 consecutive years.

Profitability

This table compares McDonald’s and Pizza Pizza Royalty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
McDonald’s	31.72%	-572.06%	14.92%
Pizza Pizza Royalty	N/A	N/A	N/A

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for McDonald’s and Pizza Pizza Royalty, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
McDonald’s	0	11	15	1	2.63
Pizza Pizza Royalty	0	1	0	0	2.00

McDonald’s presently has a consensus target price of $321.35, indicating a potential upside of 25.68%. Given McDonald’s’ stronger consensus rating and higher probable upside, equities analysts plainly believe McDonald’s is more favorable than Pizza Pizza Royalty.

Valuation & Earnings

This table compares McDonald’s and Pizza Pizza Royalty”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
McDonald’s	$27.70 billion	6.53	$8.56 billion	$12.31	20.77
Pizza Pizza Royalty	N/A	N/A	N/A	$0.81	10.66

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

Summary

McDonald’s beats Pizza Pizza Royalty on 13 of the 15 factors compared between the two stocks.

About McDonald’s

McDonald’s Corp. engages in the operation and franchising of restaurants. It operates through the following segments: U.S., International Operated Markets, and International Developmental Licensed Markets and Corporate. The U.S. segment focuses its operations on the United States. The International Operated Markets segment consists of operations and the franchising of restaurants in Australia, Canada, France, Germany, Italy, the Netherlands, Spain, and the U.K. The International Developmental Licensed Markets and Corporate segment consists of developmental licensee and affiliate markets in the McDonald’s system. The firm’s products include Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, McDonald’s Fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages, and other beverages. The company was founded by Raymond Albert Kroc on April 15, 1955, and is headquartered in Oak Brook, IL.

About Pizza Pizza Royalty

Pizza Pizza Royalty Corp., through its subsidiary, Pizza Pizza Royalty Limited Partnership, owns and franchises quick service restaurants under the Pizza Pizza and Pizza 73 brands in Canada. The company was founded in 1967 and is headquartered in Toronto, Canada.