FAT Brands (NASDAQ:FATBB) versus Darden Restaurants (NYSE:DRI) Financial Survey

Darden Restaurants (NYSE:DRI) and FAT Brands (NASDAQ:FATBB) are both retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, earnings, dividends, analyst recommendations, institutional ownership, risk and valuation.

Insider and Institutional Ownership

93.6% of Darden Restaurants shares are owned by institutional investors. 0.6% of Darden Restaurants shares are owned by insiders. Comparatively, 59.9% of FAT Brands shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Darden Restaurants and FAT Brands, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Darden Restaurants	1	7	17	0	2.64
FAT Brands	0	0	0	0	0.00

Darden Restaurants currently has a consensus price target of $192.52, suggesting a potential downside of 2.29%. Given Darden Restaurants’ stronger consensus rating and higher probable upside, equities analysts clearly believe Darden Restaurants is more favorable than FAT Brands.

Risk & Volatility

Darden Restaurants has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, FAT Brands has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500.

Valuation & Earnings

This table compares Darden Restaurants and FAT Brands”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	$11.39 billion	2.03	$1.03 billion	$8.73	22.57
FAT Brands	$480.46 million	0.13	-$90.11 million	($9.22)	-0.40

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

Profitability

This table compares Darden Restaurants and FAT Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Darden Restaurants	9.01%	50.12%	9.30%
FAT Brands	-24.53%	N/A	-10.26%

Dividends

Darden Restaurants pays an annual dividend of $5.60 per share and has a dividend yield of 2.8%. FAT Brands pays an annual dividend of $0.56 per share and has a dividend yield of 15.1%. Darden Restaurants pays out 64.1% of its earnings in the form of a dividend. FAT Brands pays out -6.1% 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. FAT Brands is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Darden Restaurants beats FAT Brands on 12 of the 15 factors compared between the two stocks.

About Darden Restaurants

Darden Restaurants, Inc., together with its subsidiaries, owns and operates full-service restaurants in the United States and Canada. It operates under Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s Prime Seafood, and Capital Burger brand names. Darden Restaurants, Inc. was incorporated in 1995 and is based in Orlando, Florida.

About FAT Brands

FAT Brands Inc., a multi-brand restaurant franchising company, acquires, develops, markets, and manages quick service, fast casual, casual dining, and polished casual dining restaurant concepts worldwide. It owns restaurant brands, including Round Table Pizza, Marble Slab Creamery, Great American Cookies, Hot Dog on a Stick, Pretzelmaker, Fazoli's, Fatburger, Johnny Rockets, Elevation Burger, Yalla Mediterranean, Buffalo's Cafe and Buffalo's Express, Hurricane Grill & Wings, Ponderosa Steakhouse/Bonanza Steakhouse, Native Grill & Wings, Smokey Bones, and Twin Peaks. The company was incorporated in 2017 and is headquartered in Beverly Hills, California. FAT Brands Inc. is a subsidiary of Fog Cutter Holdings, LLC.