Del Taco Restaurants (NASDAQ: TACO) and CEC Entertainment (NYSE:CEC) are both small-cap cyclical consumer goods & services companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, earnings, institutional ownership, profitability and dividends.
Volatility & Risk
Del Taco Restaurants has a beta of -0.29, meaning that its stock price is 129% less volatile than the S&P 500. Comparatively, CEC Entertainment has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Del Taco Restaurants and CEC Entertainment, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Del Taco Restaurants||0||1||4||0||2.80|
Del Taco Restaurants currently has a consensus target price of $16.40, suggesting a potential upside of 22.39%.
Insider and Institutional Ownership
81.4% of Del Taco Restaurants shares are held by institutional investors. 14.6% of Del Taco Restaurants shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
This table compares Del Taco Restaurants and CEC Entertainment’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Del Taco Restaurants||4.60%||5.82%||3.07%|
Valuation & Earnings
This table compares Del Taco Restaurants and CEC Entertainment’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Del Taco Restaurants||$452.08 million||1.15||$20.91 million||$0.56||23.93|
Del Taco Restaurants has higher revenue and earnings than CEC Entertainment. CEC Entertainment is trading at a lower price-to-earnings ratio than Del Taco Restaurants, indicating that it is currently the more affordable of the two stocks.
Del Taco Restaurants beats CEC Entertainment on 7 of the 9 factors compared between the two stocks.
Del Taco Restaurants Company Profile
Del Taco Restaurants, Inc. is an operator and franchisor of restaurants featuring made-to-order cuisine, including both Mexican inspired and American classic dishes. As of January 3, 2017, the Company operated 551 Del Taco restaurants. The Company’s menu offers a combination of Mexican-inspired food, such as tacos and burritos, and American classics, such as Double Del cheeseburgers, crinkle-cut fries and milkshakes. The Company’s menu features items, such as its Platos plated meals, Epic Burritos, Handcrafted Ensaladas and Fresca Bowls, as well as items on its Buck & Under Menu. As of January 3, 2017, the Company had 310 Company-operated and 241 franchise-operated restaurants. The Platos menu offering consists of individually plated meals complete with an entree, two sides, and chips and salsa. The Company’s menu also includes quesadillas, bowls and handcrafted ensaladas, as well as burgers and fries.
CEC Entertainment Company Profile
CEC Entertainment, Inc. is engaged in the family dining and entertainment center business. The Company develops, operates and franchises family dining and entertainment centers under the name Chuck E. Cheese’s. Chuck E. Cheese’s stores feature musical and comic entertainment by robotic and animated characters, arcade-style and skill-oriented games, video games, rides and other activities. All of its stores offer dining selections consisting of a range of beverages, pizzas, sandwiches, appetizers, a salad bar and desserts. As of January 1, 2012, the Company and its franchisees operated a total of 556 Chuck E. Cheese’s stores. As of January 1, 2012, it operated 507 Company-owned Chuck E. Cheese’s stores located in 44 states and Canada and its franchisees operated a total of 49 stores located in 15 states, Puerto Rico, Guam, Guatemala, Chile, Saudi Arabia and the United Arab Emirates. In February 2014, Apollo Global Management, LLC completed the acquisition of CEC Entertainment Inc.
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