Reviewing BJ’s Restaurants (NASDAQ:BJRI) & Mcdonald’s (NASDAQ:MCD)

BJ’s Restaurants (NASDAQ:BJRI) and Mcdonald’s (NYSE:MCD) are both retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, valuation and earnings.

Analyst Ratings

This is a breakdown of current ratings and target prices for BJ’s Restaurants and Mcdonald’s, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BJ’s Restaurants 2 3 10 0 2.53
Mcdonald’s 0 7 24 0 2.77

BJ’s Restaurants presently has a consensus target price of $49.86, indicating a potential upside of 36.56%. Mcdonald’s has a consensus target price of $220.93, indicating a potential upside of 2.92%. Given BJ’s Restaurants’ higher possible upside, equities research analysts clearly believe BJ’s Restaurants is more favorable than Mcdonald’s.

Profitability

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

Net Margins Return on Equity Return on Assets
BJ’s Restaurants 4.05% 14.63% 5.36%
Mcdonald’s 28.32% -92.02% 15.23%

Institutional & Insider Ownership

68.3% of Mcdonald’s shares are owned by institutional investors. 2.3% of BJ’s Restaurants shares are owned by insiders. Comparatively, 0.3% of Mcdonald’s shares are owned 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.

Earnings and Valuation

This table compares BJ’s Restaurants and Mcdonald’s’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BJ’s Restaurants $1.12 billion 0.67 $50.81 million $2.35 15.54
Mcdonald’s $21.03 billion 7.75 $5.92 billion $7.90 27.17

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

Risk & Volatility

BJ’s Restaurants has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, Mcdonald’s has a beta of 0.49, meaning that its share price is 51% less volatile than the S&P 500.

Dividends

BJ’s Restaurants pays an annual dividend of $0.48 per share and has a dividend yield of 1.3%. Mcdonald’s pays an annual dividend of $4.64 per share and has a dividend yield of 2.2%. BJ’s Restaurants pays out 20.4% of its earnings in the form of a dividend. Mcdonald’s pays out 58.7% 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. Mcdonald’s has raised its dividend for 42 consecutive years. Mcdonald’s is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Mcdonald’s beats BJ’s Restaurants on 12 of the 17 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. As of April 16, 2019, the company owned and operated 204 casual dining restaurants that offer dine-in, take-out, delivery, and party catering services in 27 states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, and Washington. BJ's Restaurants, Inc. was founded in 1978 and is based in Huntington Beach, California.

About Mcdonald’s

McDonald's Corporation operates and franchises McDonald's restaurants in the United States and internationally. Its restaurants offer various food products, soft drinks, coffee, and other beverages, as well as breakfast menu. As of December 31, 2018, the company operated 37,855 restaurants, including 35,085 franchised restaurants comprising 21,685 franchised to conventional franchisees, 7,225 licensed to developmental licensees, and 6,175 licensed to foreign affiliates; and 2,770 company-operated restaurants. McDonald's Corporation was founded in 1940 and is based in Chicago, Illinois.

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