Yum China (NYSE: DIN) and Dine Brands Global (NYSE:DIN) are both retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.
This table compares Yum China and Dine Brands Global’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Dine Brands Global||-50.50%||-35.19%||4.23%|
82.6% of Yum China shares are held by institutional investors. Comparatively, 97.1% of Dine Brands Global shares are held by institutional investors. 0.4% of Yum China shares are held by company insiders. Comparatively, 2.8% of Dine Brands Global shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Volatility and Risk
Yum China has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.Comparatively, Dine Brands Global has a beta of 0.07, indicating that its stock price is 93% less volatile than the S&P 500.
This is a breakdown of recent recommendations and price targets for Yum China and Dine Brands Global, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Dine Brands Global||0||1||2||0||2.67|
Yum China currently has a consensus target price of $45.44, indicating a potential upside of 28.86%. Dine Brands Global has a consensus target price of $104.50, indicating a potential upside of 28.85%. Given Yum China’s higher possible upside, equities research analysts clearly believe Yum China is more favorable than Dine Brands Global.
Yum China pays an annual dividend of $0.40 per share and has a dividend yield of 1.1%. Dine Brands Global pays an annual dividend of $2.52 per share and has a dividend yield of 3.1%. Yum China pays out 28.2% of its earnings in the form of a dividend. Dine Brands Global pays out 60.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Dine Brands Global has increased its dividend for 3 consecutive years. Dine Brands Global is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares Yum China and Dine Brands Global’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Yum China||$7.14 billion||1.89||$403.00 million||$1.42||24.83|
|Dine Brands Global||$604.82 million||2.37||-$330.53 million||$4.15||19.54|
Yum China has higher revenue and earnings than Dine Brands Global. Dine Brands Global is trading at a lower price-to-earnings ratio than Yum China, indicating that it is currently the more affordable of the two stocks.
Yum China beats Dine Brands Global on 10 of the 17 factors compared between the two stocks.
Yum China Company Profile
Yum China Holdings, Inc. owns, operates, and franchises restaurants in China. The company operates in two segments, KFC and Pizza Hut. It operates restaurants under the KFC, Pizza Hut, Taco Bell, East Dawning, and Little Sheep brands, which specialize in chicken, pizza, hot pot cooking, Chinese food, and Mexican-style food categories. The company also provides online food delivery services. As of December 31, 2017, it operated approximately 5,400 KFC restaurants; 2,100 Pizza Hut restaurants; 280 Little Sheep units; 10 East Dawning restaurants; and 3 Taco Bell restaurants. Yum China Holdings, Inc. was incorporated in 2016 and is headquartered in Shanghai, the People's Republic of China.
Dine Brands Global Company Profile
Dine Brands Global, Inc. owns and franchises casual and family dining restaurants. It operates through four segments: Franchise Operations, Rental operations, Company Restaurant Operations, and Financing Operations. The Franchise Operations segment comprises of royalties, fees, and other income for Applebee’s and IHOP franchised and area licensed restaurants. The Rental Operations segment covers rental income derived from lease or sublease agreements covering IHOP and Applebee’s franchised restaurants. The Company Restaurant Operations includes retail sales from IHOP company-operated restaurants. The Financing Operations segment is in charge of interest income from receivables for equipment leases and franchise fee notes generally associated with IHOP franchised restaurants developed before 2003. The company was founded by Jerry Lapin, Al Lapin, Jr. and Albert Kallis on July 7, 1958 and is headquartered in Glendale, CA.
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