Yum! Brands (YUM) vs. Cheesecake Factory (CAKE) Head-To-Head Comparison

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Yum! Brands (NYSE:YUM) and Cheesecake Factory (NASDAQ:CAKE) are both retail/wholesale companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, risk, valuation, profitability and institutional ownership.

Profitability

This table compares Yum! Brands and Cheesecake Factory’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yum! Brands 28.81% -17.89% 26.70%
Cheesecake Factory 6.02% 18.02% 8.38%

Volatility and Risk

Yum! Brands has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, Cheesecake Factory has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500.

Insider and Institutional Ownership

71.1% of Yum! Brands shares are held by institutional investors. 0.6% of Yum! Brands shares are held by company insiders. Comparatively, 8.8% of Cheesecake Factory shares are held by company 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 & Earnings

This table compares Yum! Brands and Cheesecake Factory’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Yum! Brands $5.88 billion 4.90 $1.34 billion $2.96 30.65
Cheesecake Factory $2.26 billion 1.06 $157.39 million $2.60 20.12

Yum! Brands has higher revenue and earnings than Cheesecake Factory. Cheesecake Factory is trading at a lower price-to-earnings ratio than Yum! Brands, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and recommmendations for Yum! Brands and Cheesecake Factory, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yum! Brands 0 12 7 0 2.37
Cheesecake Factory 0 14 1 0 2.07

Yum! Brands presently has a consensus price target of $90.33, indicating a potential downside of 0.43%. Cheesecake Factory has a consensus price target of $52.93, indicating a potential upside of 1.18%. Given Cheesecake Factory’s higher possible upside, analysts plainly believe Cheesecake Factory is more favorable than Yum! Brands.

Dividends

Yum! Brands pays an annual dividend of $1.44 per share and has a dividend yield of 1.6%. Cheesecake Factory pays an annual dividend of $1.32 per share and has a dividend yield of 2.5%. Yum! Brands pays out 48.6% of its earnings in the form of a dividend. Cheesecake Factory pays out 50.8% 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. Cheesecake Factory has raised its dividend for 5 consecutive years. Cheesecake Factory is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Yum! Brands beats Cheesecake Factory on 12 of the 17 factors compared between the two stocks.

Yum! Brands Company Profile

YUM! Brands, Inc., together with its subsidiaries, develops, operates, and franchises quick service restaurants worldwide. It operates in three segments: the KFC Division, the Pizza Hut Division, and the Taco Bell Division. The company operates restaurants under the KFC, Pizza Hut, and Taco Bell brands, which specialize in chicken, pizza, and Mexican-style food categories. As of December 31, 2017, it had 21,487 KFC units; 16,748 Pizza Hut units; and 6,849 Taco Bell units. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in May 2002. YUM! Brands, Inc. was founded in 1997 and is headquartered in Louisville, Kentucky.

Cheesecake Factory Company Profile

The Cheesecake Factory Incorporated operates restaurants in the United States. The company produces cheesecakes and other baked products for own restaurants and international licensees, as well as external foodservice operators, retailers, and distributors. As of August 21, 2018, it operated 215 company-owned restaurants, including 199 restaurants under The Cheesecake Factory brand; 14 restaurants under the Grand Lux Cafe brand; and 2 restaurants under the RockSugar Southeast Asian Kitchen brand, as well as 21 The Cheesecake Factory branded restaurants under licensing agreements internationally. The company was founded in 1972 and is headquartered in Calabasas, California.

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