Analyzing Del Taco Restaurants (TACO) and Popeyes Louisiana Kitchen (PLKI)

Del Taco Restaurants (NASDAQ: TACO) and Popeyes Louisiana Kitchen (NASDAQ:PLKI) are both small-cap quick service restaurants companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, valuation, risk, profitability, analyst recommendations and dividends.

Risk & Volatility

Del Taco Restaurants has a beta of -0.27, suggesting that its share price is 127% less volatile than the S&P 500. Comparatively, Popeyes Louisiana Kitchen has a beta of 0.24, suggesting that its share price is 76% less volatile than the S&P 500.

Valuation & Earnings

This table compares Del Taco Restaurants and Popeyes Louisiana Kitchen’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Del Taco Restaurants $452.08 million 1.03 $20.91 million $0.56 21.50
Popeyes Louisiana Kitchen N/A N/A N/A $1.98 39.90

Del Taco Restaurants has higher revenue and earnings than Popeyes Louisiana Kitchen. Del Taco Restaurants is trading at a lower price-to-earnings ratio than Popeyes Louisiana Kitchen, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

70.3% of Del Taco Restaurants shares are owned by institutional investors. Comparatively, 97.6% of Popeyes Louisiana Kitchen shares are owned by institutional investors. 14.6% of Del Taco Restaurants shares are owned by insiders. Comparatively, 2.2% of Popeyes Louisiana Kitchen shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Del Taco Restaurants and Popeyes Louisiana Kitchen’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Del Taco Restaurants 4.78% 5.89% 3.08%
Popeyes Louisiana Kitchen 15.08% 490.51% 15.48%

Analyst Ratings

This is a summary of current recommendations and price targets for Del Taco Restaurants and Popeyes Louisiana Kitchen, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Del Taco Restaurants 0 1 4 0 2.80
Popeyes Louisiana Kitchen 1 4 1 0 2.00

Del Taco Restaurants currently has a consensus target price of $16.40, suggesting a potential upside of 36.21%. Popeyes Louisiana Kitchen has a consensus target price of $69.75, suggesting a potential downside of 11.71%. Given Del Taco Restaurants’ stronger consensus rating and higher probable upside, equities analysts clearly believe Del Taco Restaurants is more favorable than Popeyes Louisiana Kitchen.

Summary

Popeyes Louisiana Kitchen beats Del Taco Restaurants on 6 of the 11 factors compared between the two stocks.

Del Taco Restaurants Company Profile

Del Taco Restaurants, Inc. is an operator and franchisor of restaurants featuring made-to-order cuisine, including both Mexican inspired and American classic dishes. As of January 3, 2017, the Company operated 551 Del Taco restaurants. The Company’s menu offers a combination of Mexican-inspired food, such as tacos and burritos, and American classics, such as Double Del cheeseburgers, crinkle-cut fries and milkshakes. The Company’s menu features items, such as its Platos plated meals, Epic Burritos, Handcrafted Ensaladas and Fresca Bowls, as well as items on its Buck & Under Menu. As of January 3, 2017, the Company had 310 Company-operated and 241 franchise-operated restaurants. The Platos menu offering consists of individually plated meals complete with an entree, two sides, and chips and salsa. The Company’s menu also includes quesadillas, bowls and handcrafted ensaladas, as well as burgers and fries.

Popeyes Louisiana Kitchen Company Profile

Popeyes Louisiana Kitchen, Inc. (Popeyes) develops, operates and franchises quick-service restaurants (QSRs) under the trade names Popeyes Louisiana Kitchen and Popeyes Chicken & Biscuits. The Company conducts its operations through two segments: franchise operations and Company-operated restaurants. The Company-operated restaurant segment includes the operation of Company-owned restaurants. The franchise operations segment consists of domestic and international franchising activities. The Company’s Louisiana style menu features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. As of December 25, 2016, the Company operated and franchised 2,688 Popeyes restaurants in 48 states, the District of Columbia, three territories and 25 foreign countries. As of December 25, 2016, of the 55 Company-operated restaurants, approximately 84% were concentrated in Louisiana, North Carolina and Tennessee.

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