Contrasting McDonald’s (NYSE:MCD) and Super Group (SGHC) (NYSE:SGHC)

Super Group (SGHC) (NYSE:SGHC) and McDonald’s (NYSE:MCD) are both consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Super Group (SGHC) and McDonald’s, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Super Group (SGHC)	0	3	6	0	2.67
McDonald’s	1	13	22	1	2.62

Super Group (SGHC) presently has a consensus price target of $18.00, indicating a potential upside of 68.07%. McDonald’s has a consensus price target of $294.73, indicating a potential upside of 14.17%. Given Super Group (SGHC)’s stronger consensus rating and higher probable upside, analysts plainly believe Super Group (SGHC) is more favorable than McDonald’s.

Dividends

Super Group (SGHC) pays an annual dividend of $0.20 per share and has a dividend yield of 1.9%. McDonald’s pays an annual dividend of $7.44 per share and has a dividend yield of 2.9%. Super Group (SGHC) pays out 27.8% of its earnings in the form of a dividend. McDonald’s pays out 60.4% 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. McDonald’s has increased its dividend for 50 consecutive years. McDonald’s is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Super Group (SGHC) and McDonald’s”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Super Group (SGHC)	$2.43 billion	2.23	$217.00 million	$0.72	14.88
McDonald’s	$26.89 billion	6.79	$8.56 billion	$12.31	20.97

McDonald’s has higher revenue and earnings than Super Group (SGHC). Super Group (SGHC) is trading at a lower price-to-earnings ratio than McDonald’s, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Super Group (SGHC) has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, McDonald’s has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500.

Profitability

This table compares Super Group (SGHC) and McDonald’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Super Group (SGHC)	15.22%	47.37%	29.05%
McDonald’s	31.72%	-572.06%	14.92%

Institutional & Insider Ownership

5.1% of Super Group (SGHC) shares are owned by institutional investors. Comparatively, 70.3% of McDonald’s shares are owned by institutional investors. 10.4% of Super Group (SGHC) 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.

Summary

McDonald’s beats Super Group (SGHC) on 11 of the 18 factors compared between the two stocks.

About Super Group (SGHC)

Super Group (SGHC) Limited operates as an online sports betting and gaming operator. It offers Betway, an online sports betting brand; and Spin, a multi-brand online casino offering. Super Group (SGHC) Limited is based in Saint Peter Port, Guernsey.

About McDonald’s

McDonald’s Corp. engages in the operation and franchising of restaurants. It operates through the following segments: U.S., International Operated Markets, and International Developmental Licensed Markets and Corporate. The U.S. segment focuses its operations on the United States. The International Operated Markets segment consists of operations and the franchising of restaurants in Australia, Canada, France, Germany, Italy, the Netherlands, Spain, and the U.K. The International Developmental Licensed Markets and Corporate segment consists of developmental licensee and affiliate markets in the McDonald’s system. The firm’s products include Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, McDonald’s Fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages, and other beverages. The company was founded by Raymond Albert Kroc on April 15, 1955, and is headquartered in Oak Brook, IL.