Wendy’s (NASDAQ:WEN – Get Free Report) and Sweetgreen (NYSE:SG – Get Free Report) are both small-cap retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.
Profitability
This table compares Wendy’s and Sweetgreen’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Wendy’s | 6.77% | 136.46% | 3.14% |
| Sweetgreen | 2.49% | -33.07% | -16.37% |
Earnings and Valuation
This table compares Wendy’s and Sweetgreen”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Wendy’s | $2.18 billion | 0.66 | $165.07 million | $0.78 | 9.73 |
| Sweetgreen | $674.69 million | 1.43 | -$134.07 million | $0.12 | 67.47 |
Wendy’s has higher revenue and earnings than Sweetgreen. Wendy’s is trading at a lower price-to-earnings ratio than Sweetgreen, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of current ratings for Wendy’s and Sweetgreen, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Wendy’s | 6 | 13 | 5 | 0 | 1.96 |
| Sweetgreen | 3 | 11 | 4 | 0 | 2.06 |
Wendy’s currently has a consensus target price of $8.56, indicating a potential upside of 12.74%. Sweetgreen has a consensus target price of $7.57, indicating a potential downside of 6.46%. Given Wendy’s’ higher probable upside, analysts plainly believe Wendy’s is more favorable than Sweetgreen.
Volatility and Risk
Wendy’s has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500. Comparatively, Sweetgreen has a beta of 2.17, meaning that its share price is 117% more volatile than the S&P 500.
Institutional and Insider Ownership
86.0% of Wendy’s shares are owned by institutional investors. Comparatively, 95.8% of Sweetgreen shares are owned by institutional investors. 17.1% of Wendy’s shares are owned by company insiders. Comparatively, 18.2% of Sweetgreen shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Summary
Wendy’s beats Sweetgreen on 8 of the 14 factors compared between the two stocks.
About Wendy’s
The Wendy’s Co. engages in operating, developing, and franchising a system of quick-service restaurants. It operates through the following segments: Wendy’s U.S., Wendy’s International, and Global Real Estate and Development. The Wendy’s U.S. segment includes the operation and franchising of Wendy’s restaurants in the U.S. The Wendy’s International segment is involved in the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. The Global Real Estate and Development segment focuses on real estate activity for owned sites and sites leased from third parties. The company was founded by R. David Thomas on November 15, 1969 and is headquartered in Dublin, OH.
About Sweetgreen
Sweetgreen, Inc., together with its subsidiaries, operates fast food restaurants serving healthy foods at scale in the United States. The company also accepts orders through its online and mobile ordering platforms, as well as sells gift cards that do not have an expiration date and can be redeemed. The company was founded in 2006 and is headquartered in Los Angeles, California.
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