Critical Comparison: Dutch Bros (NYSE:BROS) & Wingstop (NASDAQ:WING)

Dutch Bros (NYSE:BROS) and Wingstop (NASDAQ:WING) are both mid-cap consumer discretionary companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, risk, institutional ownership and valuation.

Profitability

This table compares Dutch Bros and Wingstop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dutch Bros	5.08%	10.46%	3.06%
Wingstop	16.03%	-15.80%	18.12%

Earnings and Valuation

This table compares Dutch Bros and Wingstop”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dutch Bros	$2.01 billion	3.05	$79.84 million	$0.78	44.99
Wingstop	$696.85 million	6.47	$174.27 million	$4.26	39.14

Wingstop has lower revenue, but higher earnings than Dutch Bros. Wingstop is trading at a lower price-to-earnings ratio than Dutch Bros, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

85.5% of Dutch Bros shares are held by institutional investors. 38.9% of Dutch Bros shares are held by insiders. Comparatively, 0.5% of Wingstop shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Dutch Bros and Wingstop, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dutch Bros	0	4	21	2	2.93
Wingstop	1	5	21	1	2.79

Dutch Bros currently has a consensus price target of $61.08, suggesting a potential upside of 74.06%. Wingstop has a consensus price target of $219.56, suggesting a potential upside of 31.68%. Given Dutch Bros’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Dutch Bros is more favorable than Wingstop.

Volatility & Risk

Dutch Bros has a beta of 1.97, indicating that its stock price is 97% more volatile than the S&P 500. Comparatively, Wingstop has a beta of 1.77, indicating that its stock price is 77% more volatile than the S&P 500.

Summary

Dutch Bros beats Wingstop on 9 of the 14 factors compared between the two stocks.

About Dutch Bros

Dutch Bros Inc. is a drive-through beverage company that operates the Dutch Bros coffee shop brand. Founded in 1992 in Grants Pass, Oregon, by brothers Dane and Travis Boersma, the company began as a small coffee pushcart and has grown into a multistate U.S. chain. Dutch Bros has expanded from its roots in the western United States into additional regions across the country. Christine Barone serves as the company’s chief executive officer, and co-founder Travis Boersma is its executive chairman.

About Wingstop

Wingstop Inc. is a restaurant company focused on chicken wings and related menu items. Its offerings include classic and boneless wings with a range of flavors, as well as chicken tenders, fries, dips and other sides. Customers can order through its restaurants and digital channels. Founded in 1994 in Garland, Texas, Wingstop has grown into an international brand. The company operates primarily through franchised restaurants in the United States and select international markets. Wingstop is headquartered in Addison, Texas.