Critical Review: Brinker International (NYSE:EAT) & Intergroup (NASDAQ:INTG)

Intergroup (NASDAQ:INTG) and Brinker International (NYSE:EAT) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Institutional and Insider Ownership

3.4% of Intergroup shares are owned by institutional investors. 73.8% of Intergroup shares are owned by insiders. Comparatively, 1.2% of Brinker International shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Intergroup and Brinker International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Intergroup	2.22%	-1.43%	1.60%
Brinker International	8.44%	125.65%	18.42%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Intergroup and Brinker International, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Intergroup	0	1	0	0	2.00
Brinker International	0	4	16	3	2.96

Brinker International has a consensus price target of $249.80, indicating a potential upside of 18.78%. Given Brinker International’s stronger consensus rating and higher possible upside, analysts plainly believe Brinker International is more favorable than Intergroup.

Risk and Volatility

Intergroup has a beta of 0.06, meaning that its share price is 94% less volatile than the S&P 500. Comparatively, Brinker International has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500.

Earnings & Valuation

This table compares Intergroup and Brinker International”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Intergroup	$73.95 million	1.15	$1.64 million	$0.71	55.63
Brinker International	$5.93 billion	1.48	$487.00 million	$11.36	18.51

Brinker International has higher revenue and earnings than Intergroup. Brinker International is trading at a lower price-to-earnings ratio than Intergroup, indicating that it is currently the more affordable of the two stocks.

Summary

Brinker International beats Intergroup on 12 of the 15 factors compared between the two stocks.

About Intergroup

The InterGroup Corporation, through its subsidiaries, operates a hotel under the Hilton San Francisco Financial District name located in San Francisco, California. The company operates through three segments: Hotel Operations, Real Estate Operations, and Investment Transactions. Its hotel consists of guest rooms and luxury suites, a restaurant, a lounge, a private dining room, meeting room space, a gym, a grand ballroom, 5-level underground parking garage, a pedestrian bridge, and a Chinese culture center. The company also invests in income-producing instruments, corporate debt and equity securities, publicly traded investment funds, mortgage-backed securities, securities issued by REITs, and other companies that invest primarily in real estate. In addition, it owns, manages, and invests in apartment complexes, single-family houses as strategic investments, and commercial real estate property located in the United States, as well as owns unimproved land in Maui, Hawaii. The InterGroup Corporation was founded in 1965 and is based in Los Angeles, California.

About Brinker International

Brinker International, Inc., together with its subsidiaries, engages in the ownership, development, operation, and franchising of casual dining restaurants in the United States and internationally. It operates and franchises Chili's Grill & Bar and Maggiano's Little Italy restaurant brands. The company also operates virtual brands, It's Just Wings. Brinker International, Inc. was founded in 1975 and is headquartered in Dallas, Texas.