BJ’s Restaurants (BJRI) versus Denny’s (DENN) Head-To-Head Review

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BJ’s Restaurants (NASDAQ: BJRI) and Denny’s (NASDAQ:DENN) are both small-cap retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, earnings, profitability, dividends, valuation and analyst recommendations.

Profitability

This table compares BJ’s Restaurants and Denny’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BJ’s Restaurants 4.77% 13.81% 5.18%
Denny’s 7.36% -41.88% 13.03%

Valuation & Earnings

This table compares BJ’s Restaurants and Denny’s’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BJ’s Restaurants $1.03 billion 1.24 $44.78 million $1.41 43.76
Denny’s $529.17 million 1.99 $39.59 million $0.58 28.50

BJ’s Restaurants has higher revenue and earnings than Denny’s. Denny’s is trading at a lower price-to-earnings ratio than BJ’s Restaurants, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for BJ’s Restaurants and Denny’s, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BJ’s Restaurants 1 5 3 0 2.22
Denny’s 0 1 1 0 2.50

BJ’s Restaurants currently has a consensus target price of $47.44, suggesting a potential downside of 23.10%. Denny’s has a consensus target price of $18.50, suggesting a potential upside of 11.92%. Given Denny’s’ stronger consensus rating and higher possible upside, analysts plainly believe Denny’s is more favorable than BJ’s Restaurants.

Insider and Institutional Ownership

94.4% of BJ’s Restaurants shares are held by institutional investors. Comparatively, 89.4% of Denny’s shares are held by institutional investors. 6.8% of BJ’s Restaurants shares are held by insiders. Comparatively, 5.8% of Denny’s shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

BJ’s Restaurants pays an annual dividend of $0.44 per share and has a dividend yield of 0.7%. Denny’s does not pay a dividend. BJ’s Restaurants pays out 31.2% of its earnings in the form of a dividend.

Risk and Volatility

BJ’s Restaurants has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500. Comparatively, Denny’s has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Summary

BJ’s Restaurants beats Denny’s on 10 of the 16 factors compared between the two stocks.

BJ’s Restaurants Company Profile

BJ's Restaurants, Inc. owns and operates casual dining restaurants in the United States. Its restaurants offer pizzas, craft and other beers, appetizers, entrées, pastas, sandwiches, specialty salads, and desserts. As of June 12, 2018, the company owned and operated 200 casual dining restaurants located in the 27 states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Washington. The company operates its restaurants under the BJ's Restaurant & Brewhouse, BJ's Restaurant & Brewery, BJ's Pizza & Grill, and BJ's Grill brand names. BJ's Restaurants, Inc. was founded in 1978 and is based in Huntington Beach, California.

Denny’s Company Profile

Denny's Corporation, through its subsidiary, Denny's, Inc., owns and operates full-service restaurant chains under the Denny's brand. As of December 27, 2017, it had 1,735 franchised, licensed, and company restaurants worldwide, including 128 restaurants in Canada, Puerto Rico, Mexico, New Zealand, Honduras, the Philippines, Costa Rica, Dominican Republic, the United Arab Emirates, Guam, Curaçao, El Salvador, Guatemala, and the United Kingdom. The company was formerly known as Advantica Restaurant Group, Inc. and changed its name to Denny's Corporation in 2002. The company was founded in 1953 and is based in Spartanburg, South Carolina.

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