Darden Restaurants (NYSE:DRI – Get Free Report) and Aramark (NYSE:ARMK – Get Free Report) are both large-cap consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, analyst recommendations and institutional ownership.
Profitability
This table compares Darden Restaurants and Aramark’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Darden Restaurants | 8.85% | 58.64% | 9.56% |
| Aramark | 1.93% | 17.68% | 4.21% |
Volatility and Risk
Darden Restaurants has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Aramark has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.
Insider and Institutional Ownership
93.6% of Darden Restaurants shares are held by institutional investors. 0.7% of Darden Restaurants shares are held by insiders. Comparatively, 2.8% of Aramark shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Darden Restaurants and Aramark”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Darden Restaurants | $13.37 billion | 1.94 | $1.21 billion | $10.23 | 22.40 |
| Aramark | $18.51 billion | 0.77 | $326.39 million | $1.43 | 37.71 |
Darden Restaurants has higher earnings, but lower revenue than Aramark. Darden Restaurants is trading at a lower price-to-earnings ratio than Aramark, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of recent ratings and recommmendations for Darden Restaurants and Aramark, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Darden Restaurants | 0 | 9 | 16 | 0 | 2.64 |
| Aramark | 0 | 2 | 13 | 0 | 2.87 |
Darden Restaurants presently has a consensus target price of $232.82, suggesting a potential upside of 1.62%. Aramark has a consensus target price of $68.82, suggesting a potential upside of 27.62%. Given Aramark’s stronger consensus rating and higher probable upside, analysts clearly believe Aramark is more favorable than Darden Restaurants.
Dividends
Darden Restaurants pays an annual dividend of $6.48 per share and has a dividend yield of 2.8%. Aramark pays an annual dividend of $0.48 per share and has a dividend yield of 0.9%. Darden Restaurants pays out 63.3% of its earnings in the form of a dividend. Aramark pays out 33.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Darden Restaurants has increased its dividend for 4 consecutive years and Aramark has increased its dividend for 1 consecutive years. Darden Restaurants is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
Darden Restaurants beats Aramark on 10 of the 17 factors compared between the two stocks.
About Darden Restaurants
Darden Restaurants, Inc. is a full-service restaurant company that owns and operates dining brands serving a range of cuisines and occasions. Its portfolio includes Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Eddie V’s and Ruth’s Chris Steak House. The company traces its roots to 1938, when founder Bill Darden opened a restaurant in Georgia. It later established the Red Lobster chain, which it operated for decades before selling the brand in 2014.
About Aramark
Aramark provides food and facilities management services to organizations around the world. Its clients include schools and universities, hospitals and other healthcare providers, businesses, sports and entertainment venues, and correctional institutions. The company plans and operates dining programs, including meal preparation, catering, concessions, and retail food services. It also provides facilities services such as maintenance, cleaning, and related operational support tailored to client needs.
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