GreenTree Hospitality Group (NYSE:GHG) and Darden Restaurants (NYSE:DRI) Financial Analysis

Darden Restaurants (NYSE:DRI) and GreenTree Hospitality Group (NYSE:GHG) are both consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, profitability, analyst recommendations and earnings.

Profitability

This table compares Darden Restaurants and GreenTree Hospitality Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Darden Restaurants	8.85%	58.64%	9.56%
GreenTree Hospitality Group	4.14%	2.49%	0.84%

Insider and Institutional Ownership

93.6% of Darden Restaurants shares are owned by institutional investors. Comparatively, 8.1% of GreenTree Hospitality Group shares are owned by institutional investors. 0.7% of Darden Restaurants shares are owned by insiders. Comparatively, 88.7% of GreenTree Hospitality Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Darden Restaurants pays an annual dividend of $6.48 per share and has a dividend yield of 3.1%. GreenTree Hospitality Group pays an annual dividend of $0.05 per share and has a dividend yield of 5.0%. Darden Restaurants pays out 63.3% of its earnings in the form of a dividend. GreenTree Hospitality Group pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Darden Restaurants has increased its dividend for 4 consecutive years.

Volatility & Risk

Darden Restaurants has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, GreenTree Hospitality Group has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.

Valuation & Earnings

This table compares Darden Restaurants and GreenTree Hospitality Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Darden Restaurants	$13.21 billion	1.82	$1.21 billion	$10.23	20.74
GreenTree Hospitality Group	$156.92 million	0.65	$23.85 million	$0.05	20.20

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Darden Restaurants and GreenTree Hospitality Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Darden Restaurants	0	9	16	0	2.64
GreenTree Hospitality Group	1	0	0	0	1.00

Darden Restaurants currently has a consensus price target of $232.82, suggesting a potential upside of 9.72%. Given Darden Restaurants’ stronger consensus rating and higher probable upside, research analysts clearly believe Darden Restaurants is more favorable than GreenTree Hospitality Group.

Summary

Darden Restaurants beats GreenTree Hospitality Group on 14 of the 16 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 GreenTree Hospitality Group

GreenTree Hospitality Group Ltd., through its subsidiaries, develops leased-and-operated, and franchised-and-managed hotels under the GreenTree Inns brand in the People's Republic of China. It also engages in investment holding activities; and provision of information technology services. The company was founded in 2004 and is headquartered in Shanghai, the People's Republic of China.