Critical Comparison: Mcdonald’s (NYSE:MCD) & J Alexanders (NYSE:JAX)

J Alexanders (NYSE:JAX) and Mcdonald’s (NYSE:MCD) are both retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Valuation & Earnings

This table compares J Alexanders and Mcdonald’s’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
J Alexanders $242.26 million 0.67 $4.00 million $0.60 18.35
Mcdonald’s $21.03 billion 7.49 $5.92 billion $7.90 26.11

Mcdonald’s has higher revenue and earnings than J Alexanders. J Alexanders is trading at a lower price-to-earnings ratio than Mcdonald’s, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

74.1% of J Alexanders shares are owned by institutional investors. Comparatively, 67.7% of Mcdonald’s shares are owned by institutional investors. 16.5% of J Alexanders shares are owned by insiders. Comparatively, 0.3% of Mcdonald’s shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Mcdonald’s pays an annual dividend of $4.64 per share and has a dividend yield of 2.2%. J Alexanders does not pay a dividend. Mcdonald’s pays out 58.7% of its earnings in the form of a dividend. Mcdonald’s has raised its dividend for 42 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for J Alexanders and Mcdonald’s, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
J Alexanders 0 0 0 0 N/A
Mcdonald’s 0 6 23 0 2.79

Mcdonald’s has a consensus price target of $207.89, suggesting a potential upside of 0.77%. Given Mcdonald’s’ higher possible upside, analysts plainly believe Mcdonald’s is more favorable than J Alexanders.

Profitability

This table compares J Alexanders and Mcdonald’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
J Alexanders 2.55% 8.53% 5.49%
Mcdonald’s 28.20% -95.31% 16.61%

Risk and Volatility

J Alexanders has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Mcdonald’s has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500.

Summary

Mcdonald’s beats J Alexanders on 11 of the 16 factors compared between the two stocks.

J Alexanders Company Profile

J. Alexander's Holdings, Inc., through its subsidiaries, owns and operates complementary upscale dining restaurants in the United States. It operates restaurants under various concepts, including J. Alexander's, Redlands Grill, Lyndhurst Grill, Overland Park Grill, and River Steakhouse and Grill. The company's restaurants offer American menu. As of April 29, 2019, it operated 46 restaurants in 16 states. J. Alexander's Holdings, Inc. was founded in 1970 and is headquartered in Nashville, Tennessee.

Mcdonald’s Company Profile

McDonald's Corporation operates and franchises McDonald's restaurants in the United States and internationally. Its restaurants offer various food products, soft drinks, coffee, and other beverages, as well as breakfast menu. As of December 31, 2018, the company operated 37,855 restaurants, including 35,085 franchised restaurants comprising 21,685 franchised to conventional franchisees, 7,225 licensed to developmental licensees, and 6,175 licensed to foreign affiliates; and 2,770 company-operated restaurants. McDonald's Corporation was founded in 1940 and is based in Chicago, Illinois.

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