Darden Restaurants (NYSE: DRI) and Ruby Tuesday (NYSE:RT) are both cyclical consumer goods & services companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, profitability, dividends, institutional ownership, valuation, analyst recommendations and earnings.
Darden Restaurants pays an annual dividend of $2.52 per share and has a dividend yield of 2.6%. Ruby Tuesday does not pay a dividend. Darden Restaurants pays out 63.5% of its earnings in the form of a dividend.
This table compares Darden Restaurants and Ruby Tuesday’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
92.1% of Darden Restaurants shares are owned by institutional investors. Comparatively, 77.2% of Ruby Tuesday shares are owned by institutional investors. 0.6% of Darden Restaurants shares are owned by company insiders. Comparatively, 4.8% of Ruby Tuesday shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Volatility and Risk
Darden Restaurants has a beta of 0.16, meaning that its share price is 84% less volatile than the S&P 500. Comparatively, Ruby Tuesday has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500.
This is a breakdown of recent recommendations and price targets for Darden Restaurants and Ruby Tuesday, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Darden Restaurants presently has a consensus target price of $96.29, suggesting a potential downside of 0.24%. Given Darden Restaurants’ higher probable upside, equities research analysts clearly believe Darden Restaurants is more favorable than Ruby Tuesday.
Earnings and Valuation
This table compares Darden Restaurants and Ruby Tuesday’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Darden Restaurants||$7.17 billion||1.66||$479.10 million||$3.97||24.31|
|Ruby Tuesday||$951.97 million||0.15||-$106.14 million||($1.27)||-1.89|
Darden Restaurants has higher revenue and earnings than Ruby Tuesday. Ruby Tuesday is trading at a lower price-to-earnings ratio than Darden Restaurants, indicating that it is currently the more affordable of the two stocks.
Darden Restaurants beats Ruby Tuesday on 12 of the 15 factors compared between the two stocks.
About Darden Restaurants
Darden Restaurants, Inc. is a full-service restaurant company. The Company owned and operated 1,536 restaurants through its subsidiaries in the United States and Canada, as of May 29, 2016. The Company’s segments include Olive Garden, LongHorn Steakhouse, Fine Dining (which includes The Capital Grille, and Eddie V’s Prime Seafood and Wildfish Seafood Grille (Eddie V’s)) and Other Business (which includes Yard House, Seasons 52, Bahama Breeze, consumer-packaged goods and franchise revenues). As of May 29, 2016, the Company also had 50 restaurants operated by independent third parties pursuant to area development and franchise agreements. Olive Garden’s menu includes a range of authentic Italian foods featuring fresh ingredients and a selection of imported Italian wines. LongHorn Steakhouse restaurants feature a range of menu items, including fresh steaks and chicken, as well as salmon, shrimp, ribs, pork chops, burgers and prime rib.
About Ruby Tuesday
Ruby Tuesday, Inc. owns and operates Ruby Tuesday casual dining and Lime Fresh Mexican Grill (Lime Fresh) casual restaurants. The Company also franchises the Ruby Tuesday concept in selected domestic and international markets, and the Lime Fresh concept in selected domestic markets. Its segments include Ruby Tuesday concept and Lime Fresh concept. As of March 1, 2016, the Company operated 729 Ruby Tuesday restaurants in 44 states, 13 foreign countries, and Guam, and there were 16 Lime Fresh restaurants in two states. Of those restaurants, it owned and operated approximately 649 Ruby Tuesday restaurants and franchised over 80 Ruby Tuesday restaurants, which consisted of 28 domestic and 52 international restaurants. It also owned and operated over eight Lime Fresh restaurants and franchised eight Lime Fresh domestic restaurants. The Company’s corporate-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic and Midwest of the United States.
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