Yum! Brands (NYSE:YUM) and El Pollo LoCo (NASDAQ:LOCO) are both retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, risk and institutional ownership.
Institutional & Insider Ownership
75.1% of Yum! Brands shares are held by institutional investors. Comparatively, 87.9% of El Pollo LoCo shares are held by institutional investors. 0.7% of Yum! Brands shares are held by company insiders. Comparatively, 46.0% of El Pollo LoCo shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Yum! Brands has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, El Pollo LoCo has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500.
This table compares Yum! Brands and El Pollo LoCo’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|El Pollo LoCo||-2.42%||10.29%||5.67%|
Valuation and Earnings
This table compares Yum! Brands and El Pollo LoCo’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Yum! Brands||$5.69 billion||5.40||$1.54 billion||$3.17||31.66|
|El Pollo LoCo||$435.83 million||1.02||-$8.99 million||$0.74||15.61|
Yum! Brands has higher revenue and earnings than El Pollo LoCo. El Pollo LoCo is trading at a lower price-to-earnings ratio than Yum! Brands, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current recommendations and price targets for Yum! Brands and El Pollo LoCo, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|El Pollo LoCo||0||1||2||0||2.67|
Yum! Brands currently has a consensus target price of $96.91, indicating a potential downside of 3.44%. El Pollo LoCo has a consensus target price of $15.00, indicating a potential upside of 29.87%. Given El Pollo LoCo’s stronger consensus rating and higher possible upside, analysts plainly believe El Pollo LoCo is more favorable than Yum! Brands.
Yum! Brands pays an annual dividend of $1.68 per share and has a dividend yield of 1.7%. El Pollo LoCo does not pay a dividend. Yum! Brands pays out 53.0% of its earnings in the form of a dividend.
Yum! Brands beats El Pollo LoCo on 10 of the 16 factors compared between the two stocks.
Yum! Brands Company Profile
YUM! Brands, Inc., together with its subsidiaries, develops, operates, and franchises quick service restaurants worldwide. It operates in three segments: the KFC Division, the Pizza Hut Division, and the Taco Bell Division. The company operates restaurants under the KFC, Pizza Hut, and Taco Bell brands, which specialize in chicken, pizza, and Mexican-style food categories. As of December 31, 2018, it had 22,621 KFC units; 18,431 Pizza Hut units; and 7,072 Taco Bell units in approximately 140 countries and territories. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in May 2002. YUM! Brands, Inc. was incorporated in 1997 and is headquartered in Louisville, Kentucky.
El Pollo LoCo Company Profile
El Pollo Loco Holdings, Inc., through its subsidiary El Pollo Loco, Inc., develops, franchises, licenses, and operates quick-service restaurants under the El Pollo Loco name. The company specializes in offering flame-grilled chicken. As of February 18, 2019, it had approximately 480 company-owned and franchised restaurants in Arizona, California, Nevada, Texas, Utah, and Louisiana. The company was formerly known as Chicken Acquisition Corp. and changed its name to El Pollo Loco Holdings, Inc. in April 2014. El Pollo Loco Holdings, Inc. was founded in 1980 and is headquartered in Costa Mesa, California.
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