Contrasting Wingstop (WING) and CEC Entertainment (CEC)

Wingstop (NASDAQ: WING) and CEC Entertainment (NYSE:CEC) are both small-cap retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, earnings, analyst recommendations, valuation and risk.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Wingstop and CEC Entertainment, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Wingstop 0 4 7 0 2.64
CEC Entertainment 0 0 0 0 N/A

Wingstop presently has a consensus price target of $37.11, suggesting a potential downside of 6.21%.

Earnings & Valuation

This table compares Wingstop and CEC Entertainment’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Wingstop $91.36 million 12.60 $15.43 million $0.72 54.96
CEC Entertainment N/A N/A N/A $2.73 N/A

Wingstop has higher revenue and earnings than CEC Entertainment. CEC Entertainment is trading at a lower price-to-earnings ratio than Wingstop, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Wingstop and CEC Entertainment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Wingstop 20.70% -32.39% 18.34%
CEC Entertainment N/A N/A N/A

Volatility and Risk

Wingstop has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500. Comparatively, CEC Entertainment has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.

Dividends

Wingstop pays an annual dividend of $0.14 per share and has a dividend yield of 0.4%. CEC Entertainment does not pay a dividend. Wingstop pays out 19.4% of its earnings in the form of a dividend.

Summary

Wingstop beats CEC Entertainment on 6 of the 9 factors compared between the two stocks.

About Wingstop

Wingstop Inc. is franchisor and operator of restaurants that specializes in cooked-to-order, hand-sauced and tossed chicken wings. The Company operates through two segments: Franchise and Company. As of December 31, 2016, the Company offers its guests 11 flavors on bone-in and boneless chicken wings paired with hand-cut, seasoned fries and sides. It is a casual chicken wings-focused restaurant chain with various concepts, which include wings as add-on menu items or focus on wings in a bar or sports-centric setting. The flavors include Atomic, Mango Habanero, Cajun, Original Hot, Louisiana Rub, Mild, Hickory Smoked BBQ, Lemon Pepper, Garlic Parmesan, Hawaiian and Teriyaki. It offers various order options, including eat-in, to go, individual, combo meals and family packs. The Company maintains Website hosting, and manages the development and maintenance of the mobile Wingstop application. It markets Wingstop products, services and restaurants through the Website, www.wingstop.com.

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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