Wendys (NASDAQ: WEN) and CEC Entertainment (NYSE:CEC) are both cyclical consumer goods & services companies, but which is the better investment? We will compare the two companies based on the strength of their risk, dividends, analyst recommendations, institutional ownership, valuation, earnings and profitability.
This table compares Wendys and CEC Entertainment’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility & Risk
Wendys has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500. Comparatively, CEC Entertainment has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500.
This is a summary of current recommendations for Wendys and CEC Entertainment, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Wendys presently has a consensus price target of $17.28, indicating a potential upside of 7.34%.
Earnings & Valuation
This table compares Wendys 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|
|Wendys||$1.44 billion||2.72||$129.62 million||$0.25||64.40|
Wendys has higher revenue and earnings than CEC Entertainment. CEC Entertainment is trading at a lower price-to-earnings ratio than Wendys, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
77.6% of Wendys shares are owned by institutional investors. 26.5% of Wendys shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Wendys pays an annual dividend of $0.28 per share and has a dividend yield of 1.7%. CEC Entertainment does not pay a dividend. Wendys pays out 112.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Wendys beats CEC Entertainment on 9 of the 11 factors compared between the two stocks.
The Wendy’s Company is the parent company of subsidiary holding company Wendy’s Restaurants, LLC (Wendy’s Restaurants). Wendy’s Restaurants is the parent company of Wendy’s International, LLC (Wendy’s), which is the owner and franchisor of the Wendy’s restaurant system in the United States. Wendy’s is a restaurant company specializing in the hamburger sandwich segment. Wendy’s is engaged in the business of operating, developing and franchising a system of restaurants serving food. The Company operated approximately 6,080 Wendy’s restaurants in operation in North America, as of January 1, 2017. Of these restaurants, 330 were operated by the Company and 5,768 by a total of 376 franchisees, as of January 1, 2017. In addition, as of January 1, 2017, there were 439 franchised Wendy’s restaurants in operation in 29 countries and territories other than North America. Wendy’s is also a partner in a restaurant real estate joint venture with a subsidiary of Restaurant Brands International Inc.
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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