Head to Head Comparison: Wendy’s (NASDAQ:WEN) and BJ’s Restaurants (NASDAQ:BJRI)

BJ’s Restaurants (NASDAQ:BJRI) and Wendy’s (NASDAQ:WEN) are both small-cap retail/wholesale companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, dividends, profitability, analyst recommendations, valuation, risk and institutional ownership.

Profitability

This table compares BJ’s Restaurants and Wendy’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BJ’s Restaurants	2.23%	12.92%	4.67%
Wendy’s	8.43%	125.74%	3.88%

Volatility and Risk

BJ’s Restaurants has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500. Comparatively, Wendy’s has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500.

Valuation and Earnings

This table compares BJ’s Restaurants and Wendy’s”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BJ’s Restaurants	$1.36 billion	0.69	$16.69 million	$1.34	33.03
Wendy’s	$2.21 billion	0.72	$194.36 million	$0.94	8.85

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

Institutional & Insider Ownership

100.0% of BJ’s Restaurants shares are held by institutional investors. Comparatively, 86.0% of Wendy’s shares are held by institutional investors. 4.3% of BJ’s Restaurants shares are held by insiders. Comparatively, 17.0% of Wendy’s shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for BJ’s Restaurants and Wendy’s, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BJ’s Restaurants	2	4	3	0	2.11
Wendy’s	5	17	4	1	2.04

BJ’s Restaurants currently has a consensus price target of $41.43, indicating a potential downside of 6.40%. Wendy’s has a consensus price target of $10.34, indicating a potential upside of 24.29%. Given Wendy’s’ higher possible upside, analysts clearly believe Wendy’s is more favorable than BJ’s Restaurants.

Summary

Wendy’s beats BJ’s Restaurants on 9 of the 15 factors compared between the two stocks.

About BJ’s Restaurants

BJ’s Restaurants, Inc. owns and operates casual dining restaurants in the United States. Its restaurants offer pizzas, craft and other beers, appetizers, entrées, pastas, sandwiches, specialty salads, and desserts under brand name Pizookie. The company was formerly known as Chicago Pizza & Brewery, Inc. and changed its name to BJ’s Restaurants, Inc. in August 2004. BJ’s Restaurants, Inc. was founded in 1978 and is based in Huntington Beach, California.

About Wendy’s

The Wendy’s Co. engages in operating, developing, and franchising a system of quick-service restaurants. It operates through the following segments: Wendy’s U.S., Wendy’s International, and Global Real Estate and Development. The Wendy’s U.S. segment includes the operation and franchising of Wendy’s restaurants in the U.S. The Wendy’s International segment is involved in the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. The Global Real Estate and Development segment focuses on real estate activity for owned sites and sites leased from third parties. The company was founded by R. David Thomas on November 15, 1969 and is headquartered in Dublin, OH.