Critical Analysis: TH International (NASDAQ:THCH) versus Darden Restaurants (NYSE:DRI)

TH International (NASDAQ:THCH) and Darden Restaurants (NYSE:DRI) are both retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.

Institutional & Insider Ownership

91.8% of TH International shares are held by institutional investors. Comparatively, 93.6% of Darden Restaurants shares are held by institutional investors. 0.9% of Darden Restaurants shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares TH International and Darden Restaurants’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TH International	-55.72%	-1,859.11%	-19.97%
Darden Restaurants	9.24%	49.94%	9.68%

Valuation and Earnings

This table compares TH International and Darden Restaurants’ gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TH International	$1.58 billion	0.03	-$123.81 million	($0.80)	-1.43
Darden Restaurants	$10.49 billion	1.68	$981.90 million	$8.53	17.35

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

Volatility and Risk

TH International has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500. Comparatively, Darden Restaurants has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for TH International and Darden Restaurants, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TH International	0	0	0	0	N/A
Darden Restaurants	0	4	15	0	2.79

Darden Restaurants has a consensus price target of $178.85, indicating a potential upside of 20.84%. Given Darden Restaurants’ higher possible upside, analysts clearly believe Darden Restaurants is more favorable than TH International.

Summary

Darden Restaurants beats TH International on 13 of the 13 factors compared between the two stocks.

About TH International

TH International Limited operates Tim Hortons coffee shops in mainland China, Hong Kong, and Macau. The company is based in Shanghai, the People's Republic of China. TH International Limited is a subsidiary of Tim Hortons Inc.

About Darden Restaurants

Darden Restaurants, Inc., together with its subsidiaries, owns and operates full-service restaurants in the United States and Canada. It operates under Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V's Prime Seafood, and Capital Burger brand names. Darden Restaurants, Inc. was incorporated in 1995 and is based in Orlando, Florida.