Comparing Papa John’s International (PZZA) & El Pollo Loco (LOCO)

El Pollo Loco (NASDAQ: LOCO) and Papa John’s International (NASDAQ:PZZA) are both cyclical consumer goods & services companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, valuation, analyst recommendations, institutional ownership and risk.

Dividends

Papa John’s International pays an annual dividend of $0.90 per share and has a dividend yield of 1.5%. El Pollo Loco does not pay a dividend. Papa John’s International pays out 31.0% of its earnings in the form of a dividend.

Insider & Institutional Ownership

78.1% of El Pollo Loco shares are owned by institutional investors. Comparatively, 84.2% of Papa John’s International shares are owned by institutional investors. 45.9% of El Pollo Loco shares are owned by company insiders. Comparatively, 27.7% of Papa John’s International shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares El Pollo Loco and Papa John’s International’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
El Pollo Loco $380.12 million 1.09 $18.33 million $0.23 46.52
Papa John’s International $1.71 billion 1.23 $102.82 million $2.90 20.80

Papa John’s International has higher revenue and earnings than El Pollo Loco. Papa John’s International is trading at a lower price-to-earnings ratio than El Pollo Loco, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

El Pollo Loco has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500. Comparatively, Papa John’s International has a beta of 0.4, meaning that its share price is 60% less volatile than the S&P 500.

Profitability

This table compares El Pollo Loco and Papa John’s International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
El Pollo Loco 2.27% 9.14% 5.37%
Papa John’s International 6.12% 4,321.08% 19.07%

Analyst Ratings

This is a breakdown of current ratings and target prices for El Pollo Loco and Papa John’s International, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
El Pollo Loco 0 3 1 0 2.25
Papa John’s International 0 6 3 0 2.33

El Pollo Loco presently has a consensus price target of $13.00, suggesting a potential upside of 21.50%. Papa John’s International has a consensus price target of $79.25, suggesting a potential upside of 31.38%. Given Papa John’s International’s stronger consensus rating and higher possible upside, analysts clearly believe Papa John’s International is more favorable than El Pollo Loco.

Summary

Papa John’s International beats El Pollo Loco on 14 of the 16 factors compared between the two stocks.

About El Pollo Loco

El Pollo Loco Holdings, Inc. specializes in fire-grilling citrus-marinated chicken and operates in the limited service restaurant (LSR) segment. The Company’s menu features its signature product, citrus-marinated fire-grilled chicken, and a range of Mexican-inspired entrees that it creates from chicken. Every day in every restaurant, the Company marinates and fire-grills its chicken over open flames, and hand-slices whole tomatoes, avocados, serrano peppers and cilantro to make its salsas, guacamole and cilantro dressings from scratch. The Company also offers burritos, salads, tostadas, bowls, stuffed quesadillas and chicken entrees. The Company’s entrees include Chicken Avocado Burrito, Under 500 Calorie entrees, Ultimate Pollo Bowl, and Stuffed Chicken Avocado Quesadilla. As of December 28, 2016, the Company had 460 restaurants, consisting of 201 Company-operated and 259 franchised restaurants. The Company also offers additional proteins, such as shrimp, carnitas and beef.

About Papa John’s International

Papa John’s International, Inc. (Papa John’s) operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and delivery restaurants under the trademark Papa John’s. The Company operates through five segments: domestic Company-owned restaurants, North America commissaries, North America franchising, international operations and all other business units. North America is defined as the United States and Canada. Domestic is defined as the contiguous United States. International franchisees are defined as all franchise operations outside of the United States and Canada. As of December 25, 2016, there were 5,097 Papa John’s restaurants in operation, consisting of 744 Company-owned and 4,353 franchised restaurants operating domestically in all 50 states and in 45 countries and territories. It offers pizza along with side items, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages.

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