Contrasting Shake Shack (SHAK) & Dunkin’ Brands (DNKN)

Shake Shack (NYSE: SHAK) and Dunkin’ Brands (NASDAQ:DNKN) are both retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, profitability, dividends and analyst recommendations.

Analyst Ratings

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This is a breakdown of recent ratings and price targets for Shake Shack and Dunkin’ Brands, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shake Shack 1 4 3 0 2.25
Dunkin’ Brands 1 8 9 0 2.44

Shake Shack currently has a consensus target price of $40.63, indicating a potential downside of 6.48%. Dunkin’ Brands has a consensus target price of $63.83, indicating a potential upside of 5.81%. Given Dunkin’ Brands’ stronger consensus rating and higher probable upside, analysts clearly believe Dunkin’ Brands is more favorable than Shake Shack.

Insider & Institutional Ownership

82.4% of Shake Shack shares are owned by institutional investors. Comparatively, 97.1% of Dunkin’ Brands shares are owned by institutional investors. 34.9% of Shake Shack shares are owned by insiders. Comparatively, 3.0% of Dunkin’ Brands shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Shake Shack and Dunkin’ Brands’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Shake Shack $358.81 million 4.45 -$320,000.00 $0.57 76.21
Dunkin’ Brands $860.50 million 5.80 $350.90 million $2.43 24.83

Dunkin’ Brands has higher revenue and earnings than Shake Shack. Dunkin’ Brands is trading at a lower price-to-earnings ratio than Shake Shack, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Shake Shack and Dunkin’ Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shake Shack -0.63% 9.47% 3.82%
Dunkin’ Brands 40.77% -190.44% 6.67%

Dividends

Dunkin’ Brands pays an annual dividend of $1.39 per share and has a dividend yield of 2.3%. Shake Shack does not pay a dividend. Dunkin’ Brands pays out 57.2% of its earnings in the form of a dividend.

Risk and Volatility

Shake Shack has a beta of 1.29, meaning that its stock price is 29% more volatile than the S&P 500. Comparatively, Dunkin’ Brands has a beta of 0.3, meaning that its stock price is 70% less volatile than the S&P 500.

Summary

Dunkin’ Brands beats Shake Shack on 11 of the 16 factors compared between the two stocks.

Shake Shack Company Profile

Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally. Its Shacks offers hamburgers, hot dogs, chicken, crinkle cut fries, shakes, frozen custard, beer, wine, and other products. As of December 27, 2017, it had 159 Shacks, including 90 domestic company-operated Shacks, 10 domestic licensed Shacks, and 59 international licensed Shacks. Shake Shack Inc. was founded in 2004 and is headquartered in New York, New York.

Dunkin’ Brands Company Profile

Dunkin' Brands Group, Inc., together with its subsidiaries, develops, franchises, and licenses quick service restaurants worldwide. The company operates through four segments: Dunkin' Donuts U.S., Dunkin' Donuts International, Baskin-Robbins International, and Baskin-Robbins U.S. Its restaurants offer hot and cold coffee, baked goods, donuts, bagels, muffins, breakfast sandwiches, hard and soft serve ice creams, frozen yogurts, shakes, malts, floats, and cakes. As of December 30, 2017, the company had 12,538 Dunkin' Donuts points of distribution and 7,982 Baskin-Robbins points of distribution. It franchises restaurants under the Dunkin' Donuts and Baskin-Robbins brands. The company is headquartered in Canton, Massachusetts.

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