Biglari (NYSE: BH) and DineEquity (NYSE:DIN) 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 risk, profitability, dividends, analyst recommendations, earnings, institutional ownership and valuation.

Profitability

This table compares Biglari and DineEquity’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Biglari 6.16% 9.84% 4.84%
DineEquity -64.74% 64.43% 4.13%

Dividends

DineEquity pays an annual dividend of $3.88 per share and has a dividend yield of 7.2%. Biglari does not pay a dividend. DineEquity pays out -17.8% of its earnings in the form of a dividend. DineEquity has raised its dividend for 3 consecutive years.

Analyst Ratings

This is a summary of current ratings and target prices for Biglari and DineEquity, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Biglari 0 0 0 0 N/A
DineEquity 0 4 2 0 2.33

DineEquity has a consensus price target of $58.75, indicating a potential upside of 9.73%. Given DineEquity’s higher probable upside, analysts plainly believe DineEquity is more favorable than Biglari.

Insider and Institutional Ownership

87.3% of Biglari shares are owned by institutional investors. Comparatively, 92.9% of DineEquity shares are owned by institutional investors. 51.2% of Biglari shares are owned by company insiders. Comparatively, 2.2% of DineEquity shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Biglari and DineEquity’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Biglari $850.08 million 0.96 $99.45 million $42.31 9.34
DineEquity $633.97 million 1.52 $97.99 million ($21.83) -2.45

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

Risk & Volatility

Biglari has a beta of 0.41, indicating that its share price is 59% less volatile than the S&P 500. Comparatively, DineEquity has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500.

Summary

DineEquity beats Biglari on 10 of the 16 factors compared between the two stocks.

About Biglari

Biglari Holdings Inc. is a holding company owning subsidiaries engaged in various business activities, including media, property and casualty insurance, and restaurants The Company’s segments include Restaurant Operations, First Guard, Maxim, Other and Corporate. The Company’s restaurant operations’ activities are conducted through approximately two restaurant concepts operated by subsidiaries Steak n Shake Inc. (Steak n Shake) and Western Sizzlin Corporation (Western). Steak n Shake is engaged in the ownership, operation and franchising of Steak n Shake restaurants. Western is engaged primarily in the franchising of restaurants. The Company’s insurance business consists of First Guard Insurance Company and its agency, 1st Guard Corporation. First Guard is a direct underwriter of commercial trucking insurance, selling physical damage and non-trucking liability insurance to truckers. Its media business consists of Maxim. Maxim’s business lies principally in media and licensing.

About DineEquity

DineEquity, Inc., through its subsidiaries, owns and franchises the Applebee’s Neighborhood Grill & Bar (Applebee’s) concept in the bar and grill segment within the casual dining category of the restaurant industry, and owns, franchises and operates the International House of Pancakes (IHOP) concept in the family dining category of the restaurant industry. It operates through four segments: Franchise operations, Rental operations, Company restaurant operations and Financing operations. As of December 31, 2016, it had 3,749 restaurants. Applebee’s menu features a selection of grill and bar fare, such as appetizers, bar snacks, burgers, classic entrees and lighter fare, as well as cocktails, beers and desserts. As of December 31, 2016, IHOP franchise and area license restaurants were located in all 50 states within the United States, in the District of Columbia, in three United States territories and in 10 countries outside of the United States.

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