Restaurant Brands International (NYSE:QSR) and Mcdonald’s (NYSE:MCD) are both large-cap retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.
Risk & Volatility
Restaurant Brands International has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500. Comparatively, Mcdonald’s has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500.
This table compares Restaurant Brands International and Mcdonald’s’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Restaurant Brands International||$5.36 billion||3.14||$612.00 million||$2.63||25.27|
|Mcdonald’s||$21.03 billion||7.17||$5.92 billion||$7.90||24.99|
Mcdonald’s has higher revenue and earnings than Restaurant Brands International. Mcdonald’s is trading at a lower price-to-earnings ratio than Restaurant Brands International, indicating that it is currently the more affordable of the two stocks.
Restaurant Brands International pays an annual dividend of $2.00 per share and has a dividend yield of 3.0%. Mcdonald’s pays an annual dividend of $4.64 per share and has a dividend yield of 2.4%. Restaurant Brands International pays out 76.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mcdonald’s pays out 58.7% of its earnings in the form of a dividend. Restaurant Brands International has increased its dividend for 3 consecutive years and Mcdonald’s has increased its dividend for 42 consecutive years.
Institutional & Insider Ownership
82.9% of Restaurant Brands International shares are held by institutional investors. Comparatively, 69.0% of Mcdonald’s shares are held by institutional investors. 3.8% of Restaurant Brands International shares are held by company insiders. Comparatively, 0.2% of Mcdonald’s shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
This table compares Restaurant Brands International and Mcdonald’s’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Restaurant Brands International||11.42%||30.16%||6.02%|
This is a summary of current ratings and price targets for Restaurant Brands International and Mcdonald’s, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Restaurant Brands International||0||3||12||0||2.80|
Restaurant Brands International presently has a consensus target price of $69.96, indicating a potential upside of 5.26%. Mcdonald’s has a consensus target price of $195.56, indicating a potential downside of 0.94%. Given Restaurant Brands International’s higher possible upside, analysts plainly believe Restaurant Brands International is more favorable than Mcdonald’s.
Mcdonald’s beats Restaurant Brands International on 10 of the 17 factors compared between the two stocks.
About Restaurant Brands International
Restaurant Brands International Inc. owns, operates, and franchises quick service restaurants under the Tim Hortons (TH), Burger King (BK), and Popeyes (PLK) brand names. The company operates through three segments: TH, BK, and PLK. Its restaurants offer blend coffee, tea, espresso-based hot and cold specialty drinks, donuts, Timbits, bagels, muffins, cookies and pastries, grilled paninis, classic sandwiches, wraps, soups, hamburgers, chicken and other specialty sandwiches, french fries, soft drinks, chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other food items. As of December 31, 2018, the company owned or franchised a total of 4,846 TH restaurants, 17,796 BK restaurants, and 3,102 PLK restaurants in approximately 100 countries worldwide and U.S. territories. Restaurant Brands International Inc. was founded in 1954 and is headquartered in Toronto, Canada.
McDonald's Corporation operates and franchises McDonald's restaurants in the United States and internationally. Its restaurants offer various food products, soft drinks, coffee, and other beverages, as well as breakfast menu. As of December 31, 2018, the company operated 37,855 restaurants, including 35,085 franchised restaurants comprising 21,685 franchised to conventional franchisees, 7,225 licensed to developmental licensees, and 6,175 licensed to foreign affiliates; and 2,770 company-operated restaurants. McDonald's Corporation was founded in 1940 and is based in Chicago, Illinois.
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