Reviewing Accel Entertainment (NYSE:ACEL) & Wendy’s (NASDAQ:WEN)

Wendy’s (NASDAQ:WEN) and Accel Entertainment (NYSE:ACEL) are both small-cap consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, analyst recommendations, earnings, profitability, valuation, risk and institutional ownership.

Institutional and Insider Ownership

86.0% of Wendy’s shares are owned by institutional investors. Comparatively, 55.4% of Accel Entertainment shares are owned by institutional investors. 17.1% of Wendy’s shares are owned by insiders. Comparatively, 14.5% of Accel Entertainment shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for Wendy’s and Accel Entertainment, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wendy’s	6	11	1	0	1.72
Accel Entertainment	0	3	3	0	2.50

Wendy’s presently has a consensus price target of $7.56, suggesting a potential downside of 7.21%. Accel Entertainment has a consensus price target of $14.25, suggesting a potential upside of 3.83%. Given Accel Entertainment’s stronger consensus rating and higher possible upside, analysts plainly believe Accel Entertainment is more favorable than Wendy’s.

Profitability

This table compares Wendy’s and Accel Entertainment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wendy’s	5.72%	115.31%	2.70%
Accel Entertainment	4.08%	22.30%	5.59%

Volatility & Risk

Wendy’s has a beta of 0.37, meaning that its share price is 63% less volatile than the S&P 500. Comparatively, Accel Entertainment has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.

Valuation and Earnings

This table compares Wendy’s and Accel Entertainment”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wendy’s	$2.18 billion	0.71	$165.07 million	$0.66	12.35
Accel Entertainment	$1.33 billion	0.84	$51.47 million	$0.76	18.06

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

Summary

Accel Entertainment beats Wendy’s on 8 of the 14 factors compared between the two stocks.

About Wendy’s

The Wendy’s Co. engages in operating, developing, and franchising a system of quick-service restaurants. It operates through the following segments: Wendy’s U.S., Wendy’s International, and Global Real Estate and Development. The Wendy’s U.S. segment includes the operation and franchising of Wendy’s restaurants in the U.S. The Wendy’s International segment is involved in the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. The Global Real Estate and Development segment focuses on real estate activity for owned sites and sites leased from third parties. The company was founded by R. David Thomas on November 15, 1969 and is headquartered in Dublin, OH.

About Accel Entertainment

Accel Entertainment, Inc., together with its subsidiaries, operates as a distributed gaming operator in the United States. It is involved in the installation, maintenance, and operation of gaming terminals; redemption devices that disburse winnings and contain automated teller machine (ATM) functionality; and other amusement devices in authorized non-casino locations, such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores. The company also provides gaming solutions to the location partners. In addition, it operates stand-alone ATMs in gaming and non-gaming locations, as well as amusement devices, including jukeboxes, dartboards, pool tables, and other related entertainment equipment. The company is headquartered in Burr Ridge, Illinois.