Starbucks Corporation (SBUX) versus Ruby Tuesday (RT) Financial Contrast

Starbucks Corporation (NASDAQ: SBUX) and Ruby Tuesday (NYSE:RT) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Institutional & Insider Ownership

70.8% of Starbucks Corporation shares are held by institutional investors. Comparatively, 75.8% of Ruby Tuesday shares are held by institutional investors. 3.4% of Starbucks Corporation shares are held by insiders. Comparatively, 4.8% of Ruby Tuesday shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Starbucks Corporation has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, Ruby Tuesday has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500.

Earnings & Valuation

This table compares Starbucks Corporation and Ruby Tuesday’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Starbucks Corporation $22.39 billion 3.65 $2.88 billion $1.97 28.95
Ruby Tuesday $951.97 million 0.15 -$106.14 million ($1.26) -1.88

Starbucks Corporation has higher revenue and earnings than Ruby Tuesday. Ruby Tuesday is trading at a lower price-to-earnings ratio than Starbucks Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

Starbucks Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 1.8%. Ruby Tuesday does not pay a dividend. Starbucks Corporation pays out 50.8% of its earnings in the form of a dividend.

Profitability

This table compares Starbucks Corporation and Ruby Tuesday’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Starbucks Corporation 12.89% 53.34% 21.21%
Ruby Tuesday -8.36% -3.67% -1.56%

Analyst Recommendations

This is a summary of recent ratings and price targets for Starbucks Corporation and Ruby Tuesday, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Starbucks Corporation 0 10 19 1 2.70
Ruby Tuesday 0 0 0 0 N/A

Starbucks Corporation currently has a consensus price target of $63.25, suggesting a potential upside of 10.89%. Given Starbucks Corporation’s higher probable upside, research analysts clearly believe Starbucks Corporation is more favorable than Ruby Tuesday.

Summary

Starbucks Corporation beats Ruby Tuesday on 12 of the 15 factors compared between the two stocks.

About Starbucks Corporation

Starbucks Corporation (Starbucks) is a roaster, marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries. The Company operates through four segments: Americas, which is inclusive of the United States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and Africa (EMEA), and Channel Development. The Company’s Americas, CAP, and EMEA segments include both company-operated and licensed stores. Its Channel Development segment includes roasted whole bean and ground coffees, Tazo teas, Starbucks- and Tazo-branded single-serve products, a range of ready-to-drink beverages, such as Frappuccino, Starbucks Doubleshot and Starbucks Refreshers beverages and other branded products sold across the world through channels, such as grocery stores, warehouse clubs, specialty retailers, convenience stores and the United States foodservice accounts.

About Ruby Tuesday

Ruby Tuesday, Inc. owns and operates Ruby Tuesday casual dining and Lime Fresh Mexican Grill (Lime Fresh) casual restaurants. The Company also franchises the Ruby Tuesday concept in selected domestic and international markets, and the Lime Fresh concept in selected domestic markets. Its segments include Ruby Tuesday concept and Lime Fresh concept. As of March 1, 2016, the Company operated 729 Ruby Tuesday restaurants in 44 states, 13 foreign countries, and Guam, and there were 16 Lime Fresh restaurants in two states. Of those restaurants, it owned and operated approximately 649 Ruby Tuesday restaurants and franchised over 80 Ruby Tuesday restaurants, which consisted of 28 domestic and 52 international restaurants. It also owned and operated over eight Lime Fresh restaurants and franchised eight Lime Fresh domestic restaurants. The Company’s corporate-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic and Midwest of the United States.

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