Reviewing Domino’s Pizza (DPZ) & Fogo de Chao (FOGO)

Domino’s Pizza (NYSE: DPZ) and Fogo de Chao (NASDAQ:FOGO) are both retail/wholesale companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, risk, earnings, dividends, analyst recommendations, institutional ownership and valuation.

Earnings & Valuation

This table compares Domino’s Pizza and Fogo de Chao’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Domino’s Pizza $2.64 billion 3.47 $510.89 million $5.02 37.83
Fogo de Chao $304.00 million 1.16 $52.73 million $0.79 15.76

Domino’s Pizza has higher revenue and earnings than Fogo de Chao. Fogo de Chao is trading at a lower price-to-earnings ratio than Domino’s Pizza, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Domino’s Pizza and Fogo de Chao, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Domino’s Pizza 0 11 9 0 2.45
Fogo de Chao 0 3 3 0 2.50

Domino’s Pizza presently has a consensus price target of $193.27, suggesting a potential upside of 1.76%. Fogo de Chao has a consensus price target of $16.42, suggesting a potential upside of 31.86%. Given Fogo de Chao’s stronger consensus rating and higher possible upside, analysts plainly believe Fogo de Chao is more favorable than Domino’s Pizza.

Risk & Volatility

Domino’s Pizza has a beta of 0.36, indicating that its stock price is 64% less volatile than the S&P 500. Comparatively, Fogo de Chao has a beta of 0.38, indicating that its stock price is 62% less volatile than the S&P 500.

Dividends

Domino’s Pizza pays an annual dividend of $1.84 per share and has a dividend yield of 1.0%. Fogo de Chao does not pay a dividend. Domino’s Pizza pays out 36.7% of its earnings in the form of a dividend. Domino’s Pizza has increased its dividend for 3 consecutive years.

Profitability

This table compares Domino’s Pizza and Fogo de Chao’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Domino’s Pizza 9.40% -13.28% 34.03%
Fogo de Chao 7.40% 8.08% 4.58%

Insider and Institutional Ownership

94.3% of Domino’s Pizza shares are owned by institutional investors. Comparatively, 85.7% of Fogo de Chao shares are owned by institutional investors. 3.6% of Domino’s Pizza shares are owned by insiders. Comparatively, 82.8% of Fogo de Chao shares are owned by 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.

Summary

Domino’s Pizza beats Fogo de Chao on 11 of the 17 factors compared between the two stocks.

About Domino’s Pizza

Domino’s Pizza, Inc. is a pizza restaurant chain company. As of January 1, 2017, the Company operated in over 13,800 locations in over 85 markets around the world. The Company operates through three segments: domestic stores, international franchise and supply chain. Its basic menu features pizza products in various sizes and crust types. As of January 1, 2017, its Domestic Stores segment consisted primarily of its franchise operations, which consisted of 4,979 franchised stores located in the contiguous United States. As of January 1, 2017, its International Franchise segment consisted of a network of franchised stores in over 85 international markets. As of January 1, 2017, its supply chain segment operated 18 regional dough manufacturing and food supply chain centers in the United States, one thin crust manufacturing center, one vegetable processing center and one center providing equipment and supplies to certain of its domestic and international stores.

About Fogo de Chao

Fogo de Chao, Inc. is a United States-based holding company. The Company, through its subsidiaries, operates upscale Brazilian churrascaria steakhouses under the brand of Fogo de Chao. The Company owns 100% of Brasa (Purchaser) Inc. (Brasa Purchaser), which owns 100% of Brasa (Holdings) Inc. (Brasa Holdings). The Company operates through two segments: United States and Brazil. It specializes in fire-roasting meats utilizing the centuries-old Southern Brazilian cooking technique of churrasco. The Company offers its guests a tasting menu of meats featuring up to 20 cuts, simply seasoned and fire-roasted to expose their natural flavors. The Company operates approximately 26 restaurants in the United States, 10 in Brazil and one in Mexico. The Company operates a range of restaurant formats, including in-line and free-standing locations. Its restaurants range in size from approximately 7,000 to 16,000 square feet, with seating from 200 to 500 guests.

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