Head-To-Head Comparison: Wendy’s (WEN) versus Greene King (GKNGY)

Wendy’s (NASDAQ: WEN) and Greene King (OTCMKTS:GKNGY) are both mid-cap retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Profitability

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This table compares Wendy’s and Greene King’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Wendy’s 15.86% 21.24% 2.68%
Greene King N/A N/A N/A

Insider and Institutional Ownership

80.6% of Wendy’s shares are held by institutional investors. 26.5% of Wendy’s shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Wendy’s pays an annual dividend of $0.34 per share and has a dividend yield of 2.0%. Greene King pays an annual dividend of $0.87 per share and has a dividend yield of 5.9%. Wendy’s pays out 79.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Greene King pays out 47.5% of its earnings in the form of a dividend. Greene King is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Wendy’s and Greene King’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Wendy’s $1.22 billion 3.38 $194.02 million $0.43 40.14
Greene King $2.87 billion 0.79 $196.23 million $1.83 8.01

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

Analyst Recommendations

This is a breakdown of recent ratings for Wendy’s and Greene King, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Wendy’s 1 9 11 0 2.48
Greene King 0 0 0 0 N/A

Wendy’s presently has a consensus target price of $17.48, indicating a potential upside of 1.27%. Given Wendy’s’ higher possible upside, research analysts plainly believe Wendy’s is more favorable than Greene King.

Risk & Volatility

Wendy’s has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, Greene King has a beta of 0.3, meaning that its share price is 70% less volatile than the S&P 500.

Summary

Wendy’s beats Greene King on 10 of the 15 factors compared between the two stocks.

About Wendy’s

The Wendy’s Company is the parent company of subsidiary holding company Wendy’s Restaurants, LLC (Wendy’s Restaurants). Wendy’s Restaurants is the parent company of Wendy’s International, LLC (Wendy’s), which is the owner and franchisor of the Wendy’s restaurant system in the United States. Wendy’s is a restaurant company specializing in the hamburger sandwich segment. Wendy’s is engaged in the business of operating, developing and franchising a system of restaurants serving food. The Company operated approximately 6,080 Wendy’s restaurants in operation in North America, as of January 1, 2017. Of these restaurants, 330 were operated by the Company and 5,768 by a total of 376 franchisees, as of January 1, 2017. In addition, as of January 1, 2017, there were 439 franchised Wendy’s restaurants in operation in 29 countries and territories other than North America. Wendy’s is also a partner in a restaurant real estate joint venture with a subsidiary of Restaurant Brands International Inc.

About Greene King

Greene King plc operates as a pub retailer and brewer in the United Kingdom. The company operates through Pub Company, Pub Partners, and Brewing & Brands segments. Its retail brands and formats include Greene King Local Pubs, Hungry Horse, Flaming Grill, Farmhouse Inns, and Chef & Brewer. The company is also involved in brewing, marketing, and selling beer under the Greene King IPA, Old Speckled Hen, Abbot Ale, and Belhaven Best brands. In addition, Greene King plc engages in the employment, financing, pension trustee, and property businesses. It operates 2,924 pubs, restaurants, and hotels across England, Wales, and Scotland, including 1,769 retail pubs, restaurants, and hotels, and 1,155 tenanted, leased, and franchised pubs. Greene King plc was founded in 1799 and is headquartered in Bury St Edmunds, the United Kingdom.

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