DineEquity (NYSE: DIN) and Starbucks Corporation (NASDAQ:SBUX) are both retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, risk, valuation, analyst recommendations, profitabiliy and earnings.
Profitability
This table compares DineEquity and Starbucks Corporation’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| DineEquity | 13.85% | 40.48% | 4.59% |
| Starbucks Corporation | 12.93% | 52.82% | 21.42% |
Analyst Recommendations
This is a summary of recent recommendations for DineEquity and Starbucks Corporation, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| DineEquity | 0 | 4 | 4 | 0 | 2.50 |
| Starbucks Corporation | 0 | 9 | 20 | 2 | 2.77 |
DineEquity currently has a consensus price target of $64.60, indicating a potential upside of 69.46%. Starbucks Corporation has a consensus price target of $64.70, indicating a potential upside of 18.67%. Given DineEquity’s higher possible upside, equities analysts clearly believe DineEquity is more favorable than Starbucks Corporation.
Institutional & Insider Ownership
88.9% of DineEquity shares are owned by institutional investors. Comparatively, 69.9% of Starbucks Corporation shares are owned by institutional investors. 2.2% of DineEquity shares are owned by company insiders. Comparatively, 3.4% of Starbucks Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Dividends
DineEquity pays an annual dividend of $3.88 per share and has a dividend yield of 10.2%. Starbucks Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 1.8%. DineEquity pays out 81.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Starbucks Corporation pays out 50.8% of its earnings in the form of a dividend. DineEquity has increased its dividend for 2 consecutive years. DineEquity is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares DineEquity and Starbucks Corporation’s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| DineEquity | $626.62 million | 1.09 | $241.22 million | $4.75 | 8.03 |
| Starbucks Corporation | $22.40 billion | 3.51 | $5.14 billion | $1.97 | 27.68 |
Starbucks Corporation has higher revenue and earnings than DineEquity. DineEquity is trading at a lower price-to-earnings ratio than Starbucks Corporation, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
DineEquity has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500. Comparatively, Starbucks Corporation has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500.
Summary
Starbucks Corporation beats DineEquity on 12 of the 18 factors compared between the two stocks.
About DineEquity
DineEquity, Inc., through its subsidiaries, owns and franchises the Applebee’s Neighborhood Grill & Bar (Applebee’s) concept in the bar and grill segment within the casual dining category of the restaurant industry, and owns, franchises and operates the International House of Pancakes (IHOP) concept in the family dining category of the restaurant industry. It operates through four segments: Franchise operations, Rental operations, Company restaurant operations and Financing operations. As of December 31, 2016, it had 3,749 restaurants. Applebee’s menu features a selection of grill and bar fare, such as appetizers, bar snacks, burgers, classic entrees and lighter fare, as well as cocktails, beers and desserts. As of December 31, 2016, IHOP franchise and area license restaurants were located in all 50 states within the United States, in the District of Columbia, in three United States territories and in 10 countries outside of the United States.
About Starbucks Corporation
Starbucks Corporation (Starbucks) is a roaster, marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries. The Company operates through four segments: Americas, which is inclusive of the United States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and Africa (EMEA), and Channel Development. The Company’s Americas, CAP, and EMEA segments include both company-operated and licensed stores. Its Channel Development segment includes roasted whole bean and ground coffees, Tazo teas, Starbucks- and Tazo-branded single-serve products, a range of ready-to-drink beverages, such as Frappuccino, Starbucks Doubleshot and Starbucks Refreshers beverages and other branded products sold across the world through channels, such as grocery stores, warehouse clubs, specialty retailers, convenience stores and the United States foodservice accounts.
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