McDonald’s (NYSE:MCD) and Super Group (SGHC) (NYSE:SGHC) Head to Head Analysis

McDonald’s (NYSE:MCD) and Super Group (SGHC) (NYSE:SGHC) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Profitability

This table compares McDonald’s and Super Group (SGHC)’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
McDonald’s	31.72%	-572.06%	14.92%
Super Group (SGHC)	15.22%	47.37%	29.05%

Insider & Institutional Ownership

70.3% of McDonald’s shares are held by institutional investors. Comparatively, 5.1% of Super Group (SGHC) shares are held by institutional investors. 0.3% of McDonald’s shares are held by insiders. Comparatively, 10.4% of Super Group (SGHC) shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

McDonald’s pays an annual dividend of $7.44 per share and has a dividend yield of 3.0%. Super Group (SGHC) pays an annual dividend of $0.20 per share and has a dividend yield of 1.8%. McDonald’s pays out 60.4% of its earnings in the form of a dividend. Super Group (SGHC) pays out 27.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. McDonald’s has increased its dividend for 50 consecutive years. McDonald’s is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

McDonald’s has a beta of 0.44, suggesting that its stock price is 56% less volatile than the S&P 500. Comparatively, Super Group (SGHC) has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for McDonald’s and Super Group (SGHC), as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
McDonald’s	1	13	22	1	2.62
Super Group (SGHC)	0	3	6	0	2.67

McDonald’s presently has a consensus target price of $295.64, indicating a potential upside of 17.82%. Super Group (SGHC) has a consensus target price of $18.00, indicating a potential upside of 65.20%. Given Super Group (SGHC)’s stronger consensus rating and higher possible upside, analysts clearly believe Super Group (SGHC) is more favorable than McDonald’s.

Earnings & Valuation

This table compares McDonald’s and Super Group (SGHC)”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
McDonald’s	$26.89 billion	6.60	$8.56 billion	$12.31	20.38
Super Group (SGHC)	$2.23 billion	2.47	$217.00 million	$0.72	15.13

McDonald’s has higher revenue and earnings than Super Group (SGHC). Super Group (SGHC) is trading at a lower price-to-earnings ratio than McDonald’s, indicating that it is currently the more affordable of the two stocks.

Summary

McDonald’s beats Super Group (SGHC) on 11 of the 18 factors compared between the two stocks.

About McDonald’s

McDonald’s Corp. engages in the operation and franchising of restaurants. It operates through the following segments: U.S., International Operated Markets, and International Developmental Licensed Markets and Corporate. The U.S. segment focuses its operations on the United States. The International Operated Markets segment consists of operations and the franchising of restaurants in Australia, Canada, France, Germany, Italy, the Netherlands, Spain, and the U.K. The International Developmental Licensed Markets and Corporate segment consists of developmental licensee and affiliate markets in the McDonald’s system. The firm’s products include Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, McDonald’s Fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages, and other beverages. The company was founded by Raymond Albert Kroc on April 15, 1955, and is headquartered in Oak Brook, IL.

About Super Group (SGHC)

Super Group (SGHC) Limited operates as an online sports betting and gaming operator. It offers Betway, an online sports betting brand; and Spin, a multi-brand online casino offering. Super Group (SGHC) Limited is based in Saint Peter Port, Guernsey.