Head to Head Review: Cheesecake Factory (CAKE) vs. Chipotle Mexican Grill (CMG)

Cheesecake Factory (NASDAQ:CAKE) and Chipotle Mexican Grill (NYSE:CMG) are both retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, analyst recommendations, valuation, risk and profitability.

Profitability

This table compares Cheesecake Factory and Chipotle Mexican Grill’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cheesecake Factory 6.02% 18.02% 8.38%
Chipotle Mexican Grill 3.96% 17.14% 11.20%

Earnings & Valuation

This table compares Cheesecake Factory and Chipotle Mexican Grill’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cheesecake Factory $2.26 billion 0.99 $157.39 million $2.60 18.90
Chipotle Mexican Grill $4.48 billion 2.93 $176.25 million $6.60 71.40

Chipotle Mexican Grill has higher revenue and earnings than Cheesecake Factory. Cheesecake Factory 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.

Dividends

Cheesecake Factory pays an annual dividend of $1.32 per share and has a dividend yield of 2.7%. Chipotle Mexican Grill does not pay a dividend. Cheesecake Factory pays out 50.8% of its earnings in the form of a dividend. Cheesecake Factory has increased its dividend for 5 consecutive years.

Risk & Volatility

Cheesecake Factory has a beta of 0.33, indicating that its stock price is 67% less volatile than the S&P 500. Comparatively, Chipotle Mexican Grill has a beta of 0.22, indicating that its stock price is 78% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Cheesecake Factory and Chipotle Mexican Grill, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cheesecake Factory 1 13 1 0 2.00
Chipotle Mexican Grill 8 15 13 0 2.14

Cheesecake Factory presently has a consensus price target of $52.64, suggesting a potential upside of 7.11%. Chipotle Mexican Grill has a consensus price target of $433.77, suggesting a potential downside of 7.95%. Given Cheesecake Factory’s higher probable upside, analysts plainly believe Cheesecake Factory is more favorable than Chipotle Mexican Grill.

Insider & Institutional Ownership

92.2% of Chipotle Mexican Grill shares are held by institutional investors. 8.8% of Cheesecake Factory shares are held by company insiders. Comparatively, 2.2% of Chipotle Mexican Grill shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Chipotle Mexican Grill beats Cheesecake Factory on 10 of the 17 factors compared between the two stocks.

About Cheesecake Factory

The Cheesecake Factory Incorporated operates restaurants in the United States. The company produces cheesecakes and other baked products for own restaurants and international licensees, as well as external foodservice operators, retailers, and distributors. As of August 21, 2018, it operated 215 company-owned restaurants, including 199 restaurants under The Cheesecake Factory brand; 14 restaurants under the Grand Lux Cafe brand; and 2 restaurants under the RockSugar Southeast Asian Kitchen brand, as well as 21 The Cheesecake Factory branded restaurants under licensing agreements internationally. The company was founded in 1972 and is headquartered in Calabasas, California.

About Chipotle Mexican Grill

Chipotle Mexican Grill, Inc., together with its subsidiaries, operates Chipotle Mexican Grill restaurants. As of September 30, 2018, it operated 2,424 Chipotle restaurants in the United States, as well as 37 international Chipotle restaurants. The company was founded in 1993 and is headquartered in Newport Beach, California.

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