Chipotle Mexican Grill (NYSE: CMG) and CEC Entertainment (NYSE:CEC) are both cyclical consumer goods & services companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, institutional ownership, profitability, valuation and earnings.
Insider & Institutional Ownership
88.4% of Chipotle Mexican Grill shares are held by institutional investors. 2.0% of Chipotle Mexican Grill shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares Chipotle Mexican Grill and CEC Entertainment’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Chipotle Mexican Grill||3.37%||11.80%||8.11%|
This is a breakdown of current recommendations for Chipotle Mexican Grill and CEC Entertainment, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Chipotle Mexican Grill||4||22||8||0||2.12|
Chipotle Mexican Grill currently has a consensus target price of $351.62, indicating a potential upside of 19.02%.
Earnings and Valuation
This table compares Chipotle Mexican Grill and CEC Entertainment’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Chipotle Mexican Grill||$3.90 billion||2.14||$22.93 million||$5.16||57.25|
Chipotle Mexican Grill has higher revenue and earnings than CEC Entertainment. CEC Entertainment 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.
Volatility & Risk
Chipotle Mexican Grill has a beta of 0.49, suggesting that its share price is 51% less volatile than the S&P 500. Comparatively, CEC Entertainment has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500.
Chipotle Mexican Grill beats CEC Entertainment on 8 of the 9 factors compared between the two stocks.
About Chipotle Mexican Grill
Chipotle Mexican Grill, Inc. (Chipotle), together with its subsidiaries, operates Chipotle Mexican Grill restaurants. The Company’s Chipotle Mexican Grill restaurants serve a menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. As of December 31, 2016, the Company managed its operations and restaurants based on 11 regions. As of December 31, 2016, the Company operated 2,198 Chipotle restaurants throughout the United States, as well as 29 international Chipotle restaurants, and it also had 23 restaurants in operation in other non-Chipotle concepts. As of December 31, 2016, 29 of its restaurants were located outside of the United States, with 17 in Canada, six in the United Kingdom, five in France and one in Frankfurt, Germany. The Company sells gift cards, which do not have an expiration date. The Company categorizes its restaurants as end-caps (at the end of a line of retail outlets), in-lines (in a line of retail outlets), free-standing or other.
About CEC Entertainment
CEC Entertainment, Inc. is engaged in the family dining and entertainment center business. The Company develops, operates and franchises family dining and entertainment centers under the name Chuck E. Cheese’s. Chuck E. Cheese’s stores feature musical and comic entertainment by robotic and animated characters, arcade-style and skill-oriented games, video games, rides and other activities. All of its stores offer dining selections consisting of a range of beverages, pizzas, sandwiches, appetizers, a salad bar and desserts. As of January 1, 2012, the Company and its franchisees operated a total of 556 Chuck E. Cheese’s stores. As of January 1, 2012, it operated 507 Company-owned Chuck E. Cheese’s stores located in 44 states and Canada and its franchisees operated a total of 49 stores located in 15 states, Puerto Rico, Guam, Guatemala, Chile, Saudi Arabia and the United Arab Emirates. In February 2014, Apollo Global Management, LLC completed the acquisition of CEC Entertainment Inc.
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