BJ’s Restaurants (BJRI) vs. Compass Group PLC (CMPGY): A Comparative Analysis for Value Investors in Retail – Restaurants Sector
Investors with an interest in the Retail – Restaurants sector are likely to have come across two prominent players: BJ’s Restaurants, Inc. (BJRI) and Compass Group PLC (CMPGY). While both companies have unique business models and value propositions, value investors may be wondering which stock offers the better value at the current market conditions.
BJ’s Restaurants, Inc. (BJRI): An Overview
BJ’s Restaurants, Inc. is an American casual dining restaurant chain known for its pizza, grilled entrées, and handcrafted desserts. The company operates under the brand name BJ’s Restaurant & Brewhouse and has a presence in 21 states and Washington D.C. The company’s business model is built around a combination of company-owned and franchised locations, with a focus on providing a high-quality dining experience.
Financial Performance
BJRI reported revenues of $1.1 billion in 2020, marking a 4.1% decline from the previous year. The company’s net income stood at $28.4 million, a significant drop from the $48.3 million reported in 2019. The decline in financial performance can be attributed to the negative impact of the COVID-19 pandemic on the restaurant industry.
Valuation Metrics
As of now, BJRI has a Price to Earnings (P/E) ratio of 22.79 and a Price to Sales (P/S) ratio of 2.13. The company’s dividend yield stands at 0.9%.
Compass Group PLC (CMPGY): An Overview
Compass Group PLC is a leading foodservice management company operating in the United States, the United Kingdom, and internationally. The company offers a range of services, including catering, food and support services, and remote site services. Compass Group serves various sectors, including business and industry, healthcare, education, and defense.
Financial Performance
CMPGY reported revenues of £24.6 billion (approximately $33.5 billion) in 2020, representing a 4.2% increase from the previous year. The company’s operating profit stood at £987.5 million (approximately $1.3 billion), a 3.4% decline from the previous year. The decline in operating profit was primarily due to the impact of the pandemic on its business.
Valuation Metrics
CMPGY has a P/E ratio of 19.49 and a P/S ratio of 1.1. The company does not pay dividends.
Comparative Analysis
When comparing the two stocks based on their valuation metrics, BJRI appears to be more expensive than CMPGY, with a higher P/E and P/S ratio. However, it is essential to consider other factors, such as growth potential and dividend yield, before making an investment decision.
Growth Potential
Both companies have shown resilience in the face of the pandemic, with BJRI focusing on its digital initiatives to offset the decline in foot traffic and Compass Group exploring opportunities in the remote site services sector. However, Compass Group’s larger size and international presence provide it with a broader growth potential compared to BJRI.
Dividend Yield
BJRI offers a dividend yield of 0.9%, which may appeal to income-focused investors. In contrast, CMPGY does not pay dividends.
Impact on Individual Investors
For individual investors, the choice between BJRI and CMPGY depends on their investment objectives. Value investors, who are primarily interested in capital appreciation, may prefer CMPGY due to its lower valuation metrics and broader growth potential. Income-focused investors, on the other hand, may find BJRI’s dividend yield attractive.
Impact on the World
The choice between BJRI and CMPGY may have minimal impact on the world at large, as both companies cater to specific market segments. However, their performance and growth prospects may influence investor sentiment and market trends in the Retail – Restaurants sector.
Conclusion
In conclusion, the decision between BJ’s Restaurants, Inc. (BJRI) and Compass Group PLC (CMPGY) depends on an investor’s investment objectives. Value investors, who are focused on capital appreciation, may prefer CMPGY due to its lower valuation metrics and broader growth potential. Income-focused investors, on the other hand, may find BJRI’s dividend yield attractive. As always, careful analysis and research are essential before making any investment decisions.
- BJ’s Restaurants, Inc. (BJRI): A casual dining restaurant chain with a focus on pizza, grilled entrées, and handcrafted desserts.
- Compass Group PLC (CMPGY): A leading foodservice management company operating in various sectors, including business and industry, healthcare, education, and defense.
- BJRI reported revenues of $1.1 billion in 2020 and has a P/E ratio of 22.79 and a P/S ratio of 2.13, with a dividend yield of 0.9%.
- CMPGY reported revenues of £24.6 billion ($33.5 billion) in 2020 and has a P/E ratio of 19.49 and a P/S ratio of 1.1, with no dividend yield.
- BJRI focuses on digital initiatives and franchising, while Compass Group explores opportunities in the remote site services sector.
- Value investors may prefer CMPGY due to its lower valuation metrics and broader growth potential, while income-focused investors may find BJRI’s dividend yield attractive.
- The choice between the two stocks may influence investor sentiment and market trends in the Retail – Restaurants sector.
