Critical Review: Del Frisco’s Restaurant Group (NASDAQ:DFRG) versus BJ’s Restaurants (NASDAQ:BJRI)

Del Frisco’s Restaurant Group (NASDAQ:DFRG) and BJ’s Restaurants (NASDAQ:BJRI) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Profitability

This table compares Del Frisco’s Restaurant Group and BJ’s Restaurants’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Del Frisco’s Restaurant Group -20.75% -3.98% -1.04%
BJ’s Restaurants 4.05% 14.63% 5.36%

Risk and Volatility

Del Frisco’s Restaurant Group has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, BJ’s Restaurants has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.

Valuation and Earnings

This table compares Del Frisco’s Restaurant Group and BJ’s Restaurants’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Del Frisco’s Restaurant Group $378.22 million 0.71 -$76.30 million ($0.18) -44.33
BJ’s Restaurants $1.12 billion 0.66 $50.81 million $2.35 15.26

BJ’s Restaurants has higher revenue and earnings than Del Frisco’s Restaurant Group. Del Frisco’s Restaurant Group is trading at a lower price-to-earnings ratio than BJ’s Restaurants, indicating that it is currently the more affordable of the two stocks.

Dividends

BJ’s Restaurants pays an annual dividend of $0.48 per share and has a dividend yield of 1.3%. Del Frisco’s Restaurant Group does not pay a dividend. BJ’s Restaurants pays out 20.4% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Del Frisco’s Restaurant Group and BJ’s Restaurants, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Del Frisco’s Restaurant Group 0 3 0 0 2.00
BJ’s Restaurants 2 3 10 0 2.53

Del Frisco’s Restaurant Group currently has a consensus target price of $8.67, indicating a potential upside of 8.60%. BJ’s Restaurants has a consensus target price of $49.86, indicating a potential upside of 39.07%. Given BJ’s Restaurants’ stronger consensus rating and higher probable upside, analysts clearly believe BJ’s Restaurants is more favorable than Del Frisco’s Restaurant Group.

Summary

BJ’s Restaurants beats Del Frisco’s Restaurant Group on 12 of the 14 factors compared between the two stocks.

Del Frisco’s Restaurant Group Company Profile

Del Frisco's Restaurant Group, Inc. develops, owns, and operates restaurants in the United States. It owns and operates restaurants under the Del Frisco's Double Eagle Steak House, Del Frisco's Grille, Barcelona Wine Bar, and bartaco brand names. The company offers steaks, as well as other menu selections, such as chops, fresh seafood, tapas, street food, and wines and cocktails. As of November 6, 2018, it operated 69 restaurants in 16 states and the District of Columbia. The company was founded in 1981 and is headquartered in Irving, Texas.

BJ’s Restaurants Company Profile

BJ's Restaurants, Inc. owns and operates casual dining restaurants in the United States. Its restaurants offer pizzas, craft and other beers, appetizers, entrées, pastas, sandwiches, specialty salads, and desserts. As of April 16, 2019, the company owned and operated 204 casual dining restaurants that offer dine-in, take-out, delivery, and party catering services in 27 states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, and Washington. BJ's Restaurants, Inc. was founded in 1978 and is based in Huntington Beach, California.

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