Starbucks Corporation (NASDAQ: SBUX) and Ruby Tuesday (NYSE:RT) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.
Starbucks Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 1.8%. Ruby Tuesday does not pay a dividend. Starbucks Corporation pays out 50.8% of its earnings in the form of a dividend.
Insider and Institutional Ownership
72.0% of Starbucks Corporation shares are held by institutional investors. Comparatively, 76.3% of Ruby Tuesday shares are held by institutional investors. 3.4% of Starbucks Corporation shares are held by company insiders. Comparatively, 4.8% of Ruby Tuesday 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.
Volatility and Risk
Starbucks Corporation has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, Ruby Tuesday has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Starbucks Corporation and Ruby Tuesday, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Starbucks Corporation presently has a consensus price target of $63.25, indicating a potential upside of 11.67%. Given Starbucks Corporation’s higher probable upside, equities analysts plainly believe Starbucks Corporation is more favorable than Ruby Tuesday.
Valuation & Earnings
This table compares Starbucks Corporation and Ruby Tuesday’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Starbucks Corporation||$22.39 billion||3.62||$2.88 billion||$1.97||28.75|
|Ruby Tuesday||$951.97 million||0.15||-$106.14 million||($1.26)||-1.88|
Starbucks Corporation has higher revenue and earnings than Ruby Tuesday. Ruby Tuesday is trading at a lower price-to-earnings ratio than Starbucks Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares Starbucks Corporation and Ruby Tuesday’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Starbucks Corporation beats Ruby Tuesday on 12 of the 15 factors compared between the two stocks.
Starbucks Corporation Company Profile
Starbucks Corporation (Starbucks) is a roaster, marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries. The Company operates through four segments: Americas, which is inclusive of the United States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and Africa (EMEA), and Channel Development. The Company’s Americas, CAP, and EMEA segments include both company-operated and licensed stores. Its Channel Development segment includes roasted whole bean and ground coffees, Tazo teas, Starbucks- and Tazo-branded single-serve products, a range of ready-to-drink beverages, such as Frappuccino, Starbucks Doubleshot and Starbucks Refreshers beverages and other branded products sold across the world through channels, such as grocery stores, warehouse clubs, specialty retailers, convenience stores and the United States foodservice accounts.
Ruby Tuesday Company Profile
Ruby Tuesday, Inc. owns and operates Ruby Tuesday casual dining and Lime Fresh Mexican Grill (Lime Fresh) casual restaurants. The Company also franchises the Ruby Tuesday concept in selected domestic and international markets, and the Lime Fresh concept in selected domestic markets. Its segments include Ruby Tuesday concept and Lime Fresh concept. As of March 1, 2016, the Company operated 729 Ruby Tuesday restaurants in 44 states, 13 foreign countries, and Guam, and there were 16 Lime Fresh restaurants in two states. Of those restaurants, it owned and operated approximately 649 Ruby Tuesday restaurants and franchised over 80 Ruby Tuesday restaurants, which consisted of 28 domestic and 52 international restaurants. It also owned and operated over eight Lime Fresh restaurants and franchised eight Lime Fresh domestic restaurants. The Company’s corporate-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic and Midwest of the United States.
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