Reviewing Dutch Bros (NYSE:BROS) and McDonald’s (NYSE:MCD)

Dutch Bros (NYSE:BROS) and McDonald’s (NYSE:MCD) are both retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

Earnings & Valuation

This table compares Dutch Bros and McDonald’s”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dutch Bros	$1.64 billion	4.75	$79.84 million	$0.64	73.88
McDonald’s	$26.89 billion	8.62	$8.56 billion	$11.95	27.31

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

Risk & Volatility

Dutch Bros has a beta of 2.54, meaning that its share price is 154% more volatile than the S&P 500. Comparatively, McDonald’s has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500.

Profitability

This table compares Dutch Bros and McDonald’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dutch Bros	4.87%	9.56%	2.82%
McDonald’s	31.85%	-343.90%	14.82%

Insider and Institutional Ownership

85.5% of Dutch Bros shares are held by institutional investors. Comparatively, 70.3% of McDonald’s shares are held by institutional investors. 42.4% of Dutch Bros shares are held by company insiders. Comparatively, 0.3% of McDonald’s shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and price targets for Dutch Bros and McDonald’s, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dutch Bros	0	3	20	1	2.92
McDonald’s	2	13	17	0	2.47

Dutch Bros currently has a consensus price target of $76.73, indicating a potential upside of 62.27%. McDonald’s has a consensus price target of $339.69, indicating a potential upside of 4.07%. Given Dutch Bros’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Dutch Bros is more favorable than McDonald’s.

Summary

Dutch Bros beats McDonald’s on 9 of the 15 factors compared between the two stocks.

About Dutch Bros

Dutch Bros Inc., together with its subsidiaries, operates and franchises drive-thru shops in the United States. The company operates through Company-Operated Shops and Franchising and Other segments. It serves through company-operated shops and online channels under Dutch Bros; Dutch Bros Coffee; Dutch Bros Rebel; Dutch Bros; and Blue Rebel brands. Dutch Bros Inc. was founded in 1992 and is headquartered in Grants Pass, Oregon.

About McDonald’s

McDonald’s Corp. engages in the operation and franchising of restaurants. It operates through the following segments: U.S., International Operated Markets, and International Developmental Licensed Markets and Corporate. The U.S. segment focuses its operations on the United States. The International Operated Markets segment consists of operations and the franchising of restaurants in Australia, Canada, France, Germany, Italy, the Netherlands, Spain, and the U.K. The International Developmental Licensed Markets and Corporate segment consists of developmental licensee and affiliate markets in the McDonald’s system. The firm’s products include Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, McDonald’s Fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages, and other beverages. The company was founded by Raymond Albert Kroc on April 15, 1955, and is headquartered in Oak Brook, IL.