The Cheesecake Factory Incorporated (CAKE) and Pebblebrook Hotel Trust (PEB) both have caught the attention of the investment community that recently hit new low. Naturally, this has created a bit of a stir amongst investors. We will compare the two companies across various metrics including growth, profitability, risk, return, dividends, and valuation to determine if one is a better choice than the other.
The company has grown sales at a 4.70% annual rate over the past five years, putting it in the low growth category. CAKE has a net profit margin of 5.10% and is more profitable than the average company in the Restaurants industry. In terms of efficiency, CAKE has an asset turnover ratio of 1.06. This figure represents the amount of revenue a company generates per dollar of assets. CAKE’s financial leverage ratio is 3.97, which indicates that the company’s asset base is primarily funded by debt. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 23.30%, which is better than the Restaurants industry average ROE.
The Cheesecake Factory Incorporated (CAKE) pays out an annual dividend of 1.44 per share. At the current valuation, this equates to a dividend yield of 7.31%. The company has a payout ratio of 47.60%. CAKE’s current dividend therefore should be sustainable. Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 6.85 All else equal, companies with higher FCF yields are viewed as cheaper. Company trades at a P/E ratio of 6.86, and is less expensive than the average stock in the Restaurants industry. The average investment recommendation for CAKE, taken from a group of Wall Street Analysts, is 2.70, or a Moderate Sell.
Over the past six months, The Cheesecake Factory Incorporated insiders have been net sellers, acquiring a net of 26272.0 shares. This implies that insiders have been feeling relatively bullish about the outlook for CAKE. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. CAKE has a beta of 1.40 and therefore an above average level of market volatility.
Pebblebrook Hotel Trust (NYSE:PEB) operates in the REIT – Hotel & Motel segment of the Real Estate sector. PEB has increased sales at a 21.90% CAGR over the past five years, and is considered a medium growth stock. The company has a net profit margin of 5.10% and is less profitable than the average REIT – Hotel & Motel player. PEB’s asset turnover ratio is 0.24 and the company has financial leverage of 0.78. Company is therefore mostly financed by equity capital. PEB’s return on equity of 2.30% is worse than the REIT – Hotel & Motel industry average.
Pebblebrook Hotel Trust (PEB) pays a dividend of 0.04, which translates to dividend yield of 0.40% based on the current price. Stock has a payout ratio of 180.10%. According to this ratio, PEB should be able to continue making payouts at these levels. The company trades at a free cash flow yield of -2.27 and has a P/E of 16.00. Compared to the average company in the 12.77 space, PEB is relatively expensive. The average analyst recommendation for PEB is 3.10, or a Hold.
Pebblebrook Hotel Trust insiders have bought a net of 172716.0 shares during the past three months, which implies that the company’s top executives have been feeling bullish about the stock’s outlook. Finally, PEB’s beta of 1.64 indicates that the stock has an above average level of market risk.
The Cheesecake Factory Incorporated (NASDAQ:CAKE) scores higher than Pebblebrook Hotel Trust (NYSE:PEB) on 9 of the 13 measures compared between the two companies. CAKE has the better fundamentals, scoring higher on growth, profitability and leverage, return metrics. CAKE’s dividend is more attractive. CAKE wins on valuation measures.
Source: Thanks https://weeklyoracle.com/2020/05/07/a-side-by-side-analysis-of-the-cheesecake-factory-incorporated-cake-and-pebblebrook-hotel-trust-peb/