Chipotle Mexican Grill (NYSE: CMG) and Yum China Holdings (NYSE:YUMC) are both mid-cap quick service restaurants companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, institutional ownership, risk and profitability.
Institutional & Insider Ownership
90.7% of Chipotle Mexican Grill shares are held by institutional investors. Comparatively, 77.9% of Yum China Holdings shares are held by institutional investors. 2.0% of Chipotle Mexican Grill shares are held by company insiders. Comparatively, 0.2% of Yum China Holdings shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This is a breakdown of current ratings for Chipotle Mexican Grill and Yum China Holdings, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Chipotle Mexican Grill||5||21||9||0||2.11|
|Yum China Holdings||1||3||8||0||2.58|
Chipotle Mexican Grill currently has a consensus price target of $350.80, suggesting a potential upside of 23.65%. Yum China Holdings has a consensus price target of $43.21, suggesting a potential upside of 2.32%. Given Chipotle Mexican Grill’s higher possible upside, equities research analysts clearly believe Chipotle Mexican Grill is more favorable than Yum China Holdings.
Valuation & Earnings
This table compares Chipotle Mexican Grill and Yum China Holdings’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Chipotle Mexican Grill||$3.90 billion||2.05||$22.93 million||$5.16||54.98|
|Yum China Holdings||$6.75 billion||2.40||$502.00 million||$1.47||28.73|
Yum China Holdings has higher revenue and earnings than Chipotle Mexican Grill. Yum China Holdings is trading at a lower price-to-earnings ratio than Chipotle Mexican Grill, indicating that it is currently the more affordable of the two stocks.
This table compares Chipotle Mexican Grill and Yum China Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Chipotle Mexican Grill||3.37%||11.80%||8.11%|
|Yum China Holdings||8.43%||21.35%||14.21%|
Yum China Holdings beats Chipotle Mexican Grill on 7 of the 13 factors compared between the two stocks.
Chipotle Mexican Grill Company Profile
Chipotle Mexican Grill, Inc. (Chipotle), together with its subsidiaries, operates Chipotle Mexican Grill restaurants. The Company’s Chipotle Mexican Grill restaurants serve a menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. As of December 31, 2016, the Company managed its operations and restaurants based on 11 regions. As of December 31, 2016, the Company operated 2,198 Chipotle restaurants throughout the United States, as well as 29 international Chipotle restaurants, and it also had 23 restaurants in operation in other non-Chipotle concepts. As of December 31, 2016, 29 of its restaurants were located outside of the United States, with 17 in Canada, six in the United Kingdom, five in France and one in Frankfurt, Germany. The Company sells gift cards, which do not have an expiration date. The Company categorizes its restaurants as end-caps (at the end of a line of retail outlets), in-lines (in a line of retail outlets), free-standing or other.
Yum China Holdings Company Profile
Yum China Holdings, Inc. is a restaurant company. The Company’s segments include KFC, Pizza Hut Casual Dining, and All Other Segments, including Pizza Hut Home Service, East Dawning, Little Sheep and Taco Bell. As of December 31, 2016, the Company had over 7,500 restaurants in China. Its restaurant base consists of various restaurant concepts. The Company’s restaurants in each of its concept offer consumers the ability to dine in and/or carry out food. In addition, KFC, Pizza Hut Casual Dining, Pizza Hut Home Service and East Dawning offer delivery service. KFC is the quick-service restaurant (QSR) brand. Pizza Hut Casual Dining is the casual dining restaurant (CDR) brand. As of December 31, 2016, the Company had over 360 Pizza Hut Home Service units in over 50 cities in China. The Little Sheep concept specializes in Hot Pot cooking. East Dawning is a Chinese food QSR brand. Taco Bell is a QSR brand specializing in Mexican-style food.
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