Chuy’s Holdings (CHUY) & DineEquity (DIN) Critical Analysis

Chuy’s Holdings (NASDAQ: CHUY) and DineEquity (NYSE:DIN) are both small-cap retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, valuation and risk.

Analyst Recommendations

This is a summary of recent recommendations for Chuy’s Holdings and DineEquity, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chuy’s Holdings 0 7 2 0 2.22
DineEquity 0 4 3 0 2.43

Chuy’s Holdings currently has a consensus price target of $26.89, suggesting a potential upside of 21.95%. DineEquity has a consensus price target of $57.00, suggesting a potential upside of 18.70%. Given Chuy’s Holdings’ higher probable upside, analysts clearly believe Chuy’s Holdings is more favorable than DineEquity.

Risk & Volatility

Chuy’s Holdings has a beta of -0.02, meaning that its stock price is 102% less volatile than the S&P 500. Comparatively, DineEquity has a beta of 0.4, meaning that its stock price is 60% less volatile than the S&P 500.

Dividends

DineEquity pays an annual dividend of $3.88 per share and has a dividend yield of 8.1%. Chuy’s Holdings does not pay a dividend. DineEquity pays out 86.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chuy’s Holdings has raised its dividend for 2 consecutive years.

Earnings & Valuation

This table compares Chuy’s Holdings and DineEquity’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Chuy’s Holdings $346.03 million 1.08 $41.16 million $0.99 22.27
DineEquity $621.56 million 1.39 $234.57 million $4.48 10.72

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

Insider & Institutional Ownership

99.8% of Chuy’s Holdings shares are owned by institutional investors. Comparatively, 92.0% of DineEquity shares are owned by institutional investors. 3.3% of Chuy’s Holdings shares are owned by insiders. Comparatively, 2.2% of DineEquity shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Chuy’s Holdings and DineEquity’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chuy’s Holdings 4.86% 11.16% 7.30%
DineEquity 13.02% 38.34% 4.35%

Summary

DineEquity beats Chuy’s Holdings on 10 of the 17 factors compared between the two stocks.

About Chuy’s Holdings

Chuy’s Holdings, Inc. operates Chuy’s, a restaurant concept offering a distinct menu of authentic, freshly prepared Mexican and Tex-Mex inspired food. As of December 25, 2016, the Company operated 80 Chuy’s restaurants across 16 states. The Company offers the same menu during lunch and dinner, which includes enchiladas, fajitas, tacos, burritos, combination platters and daily specials, complemented by a range of appetizers, soups and salads. Each of the Company’s restaurants offers a range of homemade sauces, including the signature Hatch green chile and creamy jalapeno sauces. The Company also offers a full-service bar in all of its restaurants providing its customers a range of beverage offerings, featuring a selection of specialty cocktails including its signature on-the-rocks margaritas made with fresh, hand-squeezed lime juice, and the Texas Martini, a made-to-order, hand-shaken cocktail served with jalapeno-stuffed olives.

About DineEquity

DineEquity, Inc., through its subsidiaries, owns and franchises the Applebee’s Neighborhood Grill & Bar (Applebee’s) concept in the bar and grill segment within the casual dining category of the restaurant industry, and owns, franchises and operates the International House of Pancakes (IHOP) concept in the family dining category of the restaurant industry. It operates through four segments: Franchise operations, Rental operations, Company restaurant operations and Financing operations. As of December 31, 2016, it had 3,749 restaurants. Applebee’s menu features a selection of grill and bar fare, such as appetizers, bar snacks, burgers, classic entrees and lighter fare, as well as cocktails, beers and desserts. As of December 31, 2016, IHOP franchise and area license restaurants were located in all 50 states within the United States, in the District of Columbia, in three United States territories and in 10 countries outside of the United States.

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