Diversified Restaurant Holdings (NASDAQ: SAUC) and Cracker Barrel Old Country Store (NASDAQ:CBRL) are both retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, earnings, analyst recommendations, risk and profitability.

Risk & Volatility

Diversified Restaurant Holdings has a beta of 1.38, meaning that its stock price is 38% more volatile than the S&P 500. Comparatively, Cracker Barrel Old Country Store has a beta of 0.51, meaning that its stock price is 49% less volatile than the S&P 500.

Valuation & Earnings

This table compares Diversified Restaurant Holdings and Cracker Barrel Old Country Store’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Diversified Restaurant Holdings $166.70 million 0.33 $20.34 million ($0.22) -9.27
Cracker Barrel Old Country Store $2.93 billion 1.25 $399.48 million $8.38 18.14

Cracker Barrel Old Country Store has higher revenue and earnings than Diversified Restaurant Holdings. Diversified Restaurant Holdings is trading at a lower price-to-earnings ratio than Cracker Barrel Old Country Store, indicating that it is currently the more affordable of the two stocks.

Dividends

Cracker Barrel Old Country Store pays an annual dividend of $4.80 per share and has a dividend yield of 3.2%. Diversified Restaurant Holdings does not pay a dividend. Cracker Barrel Old Country Store pays out 57.3% of its earnings in the form of a dividend. Cracker Barrel Old Country Store has increased its dividend for 7 consecutive years.

Profitability

This table compares Diversified Restaurant Holdings and Cracker Barrel Old Country Store’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Diversified Restaurant Holdings -3.39% -60.83% -0.51%
Cracker Barrel Old Country Store 6.90% 35.49% 13.26%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Diversified Restaurant Holdings and Cracker Barrel Old Country Store, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Diversified Restaurant Holdings 0 0 1 0 3.00
Cracker Barrel Old Country Store 1 7 0 0 1.88

Diversified Restaurant Holdings presently has a consensus target price of $3.50, suggesting a potential upside of 71.57%. Cracker Barrel Old Country Store has a consensus target price of $161.00, suggesting a potential upside of 5.92%. Given Diversified Restaurant Holdings’ stronger consensus rating and higher probable upside, research analysts plainly believe Diversified Restaurant Holdings is more favorable than Cracker Barrel Old Country Store.

Institutional & Insider Ownership

11.1% of Diversified Restaurant Holdings shares are held by institutional investors. Comparatively, 85.8% of Cracker Barrel Old Country Store shares are held by institutional investors. 49.6% of Diversified Restaurant Holdings shares are held by company insiders. Comparatively, 1.0% of Cracker Barrel Old Country Store shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Cracker Barrel Old Country Store beats Diversified Restaurant Holdings on 10 of the 16 factors compared between the two stocks.

Diversified Restaurant Holdings Company Profile

Diversified Restaurant Holdings, Inc. (DRH) is a restaurant company. The Company is a franchisee of Buffalo Wild Wings (BWW).As of September 25, 2016, the Company operated 64 BWW restaurants, which are located in Michigan, Florida, Missouri, Illinois and Indiana. The BWW restaurants feature a range of menu items with a multimedia social environment, a bar and an open layout designed to create a dining experience for sports fans and families. Its guests have the option of watching various sporting events on projection screens or televisions. As of September 25, 2016, the BWW menu specialized in 21 sauces and seasonings with flavors ranging from Sweet BBQ to Blazin’. As of September 25, 2016, the restaurants offered 12 to 30 domestic and imported beers on tap, including several local or regional microbrews and a selection of bottled beer, wine and liquor.

Cracker Barrel Old Country Store Company Profile

Cracker Barrel Old Country Store, Inc. is engaged in the operation and development of the Cracker Barrel Old Country Store concept (Cracker Barrel). The Company’s segments include Restaurant and Retail. As of September 19, 2016, the Company operated 640 Cracker Barrel stores in 43 states. The format of its stores consists of a rustic old country-store design offering a restaurant menu that features home-style country food and a range of decorative and functional items, such as rocking chairs, holiday and seasonal gifts and toys, apparel, cookware and foods. Its restaurants offer home-style country cooking featuring of its own recipes. Its restaurants serve breakfast, lunch and dinner. Its breakfast items include juices, eggs, pancakes, grits, and a range of biscuit specialties. Its lunch and dinner items include country ham, chicken and dumplings, chicken fried chicken, meatloaf, fresh side items and specialty items, such as pinto beans and turnip greens.

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