Aramark (NYSE: ARMK) and The Cheesecake Factory (NASDAQ:CAKE) are both mid-cap consumer staples companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, analyst recommendations, valuation, earnings and risk.
Aramark pays an annual dividend of $0.41 per share and has a dividend yield of 1.0%. The Cheesecake Factory pays an annual dividend of $0.96 per share and has a dividend yield of 2.1%. Aramark pays out 29.9% of its earnings in the form of a dividend. The Cheesecake Factory pays out 33.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. The Cheesecake Factory has raised its dividend for 2 consecutive years. The Cheesecake Factory is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Aramark and The Cheesecake Factory’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|The Cheesecake Factory||6.10%||22.92%||11.11%|
Institutional & Insider Ownership
95.9% of Aramark shares are owned by institutional investors. Comparatively, 96.4% of The Cheesecake Factory shares are owned by institutional investors. 2.9% of Aramark shares are owned by company insiders. Comparatively, 8.5% of The Cheesecake Factory shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Earnings and Valuation
This table compares Aramark and The Cheesecake Factory’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Aramark||$14.49 billion||0.66||$1.29 billion||$1.37||28.72|
|The Cheesecake Factory||$2.30 billion||0.90||$283.81 million||$2.85||15.72|
Aramark has higher revenue and earnings than The Cheesecake Factory. The Cheesecake Factory is trading at a lower price-to-earnings ratio than Aramark, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Aramark has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500. Comparatively, The Cheesecake Factory has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500.
This is a breakdown of current recommendations and price targets for Aramark and The Cheesecake Factory, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|The Cheesecake Factory||1||12||5||0||2.22|
Aramark currently has a consensus target price of $43.14, suggesting a potential upside of 9.64%. The Cheesecake Factory has a consensus target price of $54.59, suggesting a potential upside of 21.85%. Given The Cheesecake Factory’s higher probable upside, analysts plainly believe The Cheesecake Factory is more favorable than Aramark.
The Cheesecake Factory beats Aramark on 11 of the 18 factors compared between the two stocks.
Aramark is a global provider of food, facilities and uniform services to education, healthcare, business and industry, and sports, leisure and corrections clients. The Company operates through three segments: Food and Support Services North America (FSS North America), Food and Support Services International (FSS International), and Uniform and Career Apparel (Uniform). FSS North America and FSS International segments include food, refreshment, specialized dietary and support services, including facility maintenance and housekeeping, provided to business, educational and healthcare institutions and in sports, leisure and other facilities. The Uniform segment includes rental, sale, cleaning, maintenance and delivery of personalized uniforms and other textile items to clients in a range of industries in the United States, Puerto Rico, Japan and Canada, including manufacturing, transportation, construction, restaurants and hotels, healthcare and pharmaceutical industries.
About The Cheesecake Factory
The Cheesecake Factory Incorporated is engaged in the restaurant and bakery business. As of March 2, 2017, the Company operated 208 Company-owned restaurants: 194 under The Cheesecake Factory mark, 13 under the Grand Lux Cafe mark and one under the Rock Sugar Pan Asian Kitchen mark. The Company’s segments include The Cheesecake Factory restaurants, and other. It also operates bakery production facilities, which produce desserts for its restaurants, international licensees and third-party bakery customers. Its restaurants offer lunch and dinner, as well as Sunday brunch. Its restaurants also offer a bar. As of January 3, 2017, its menu consisted of over 200 items in addition to items presented on supplemental menus, such as its SkinnyLicious menu, which offers approximately 50 items. Its Grand Lux Cafe is a casual dining concept that offers artisan cuisine. It offers appetizers, seafood and steaks.
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