J Alexanders (JAX) & Chipotle Mexican Grill (CMG) Critical Review

J Alexanders (NYSE:JAX) and Chipotle Mexican Grill (NYSE:CMG) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, dividends, institutional ownership, profitability, valuation and analyst recommendations.

Profitability

This table compares J Alexanders and Chipotle Mexican Grill’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
J Alexanders 3.43% 7.50% 5.14%
Chipotle Mexican Grill 3.65% 15.64% 10.33%

Institutional and Insider Ownership

70.8% of J Alexanders shares are held by institutional investors. Comparatively, 88.0% of Chipotle Mexican Grill shares are held by institutional investors. 15.0% of J Alexanders shares are held by company insiders. Comparatively, 2.2% of Chipotle Mexican Grill shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares J Alexanders and Chipotle Mexican Grill’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
J Alexanders $233.26 million 0.81 $7.33 million $0.53 24.34
Chipotle Mexican Grill $4.48 billion 2.89 $176.25 million $6.60 70.55

Chipotle Mexican Grill has higher revenue and earnings than J Alexanders. J Alexanders is trading at a lower price-to-earnings ratio than Chipotle Mexican Grill, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for J Alexanders and Chipotle Mexican Grill, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
J Alexanders 0 0 0 0 N/A
Chipotle Mexican Grill 5 17 10 0 2.16

Chipotle Mexican Grill has a consensus price target of $418.97, indicating a potential downside of 10.02%. Given Chipotle Mexican Grill’s higher probable upside, analysts plainly believe Chipotle Mexican Grill is more favorable than J Alexanders.

Risk and Volatility

J Alexanders has a beta of -0.07, suggesting that its share price is 107% less volatile than the S&P 500. Comparatively, Chipotle Mexican Grill has a beta of 0.44, suggesting that its share price is 56% less volatile than the S&P 500.

Summary

Chipotle Mexican Grill beats J Alexanders on 12 of the 13 factors compared between the two stocks.

About J Alexanders

J. Alexander's Holdings, Inc., through its subsidiaries, owns and operates full service restaurants in the United States. It operates four complementary upscale dining restaurant concepts, including J. Alexander's, Redlands Grill, Lyndhurst Grill, and Stoney River Steakhouse and Grill (Stoney River). The company's restaurants offer American menu. As of March 14, 2018, it operated 44 restaurants in 15 states. J. Alexander's Holdings, Inc. was founded in 1970 and is headquartered in Nashville, Tennessee.

About Chipotle Mexican Grill

Chipotle Mexican Grill, Inc., together with its subsidiaries, operates Chipotle Mexican Grill restaurants. As of December 31, 2017, it operated 2,363 Chipotle restaurants throughout the United States, as well as 37 international Chipotle restaurants; and 8 non-Chipotle restaurants. The company was founded in 1993 and is based in Denver, Colorado.

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