Fiesta Restaurant Group (NASDAQ: FRGI) and Denny’s Corporation (NASDAQ:DENN) are both small-cap retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, valuation and institutional ownership.
This is a breakdown of current ratings and target prices for Fiesta Restaurant Group and Denny’s Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Fiesta Restaurant Group||1||5||1||0||2.00|
Fiesta Restaurant Group currently has a consensus price target of $23.40, suggesting a potential upside of 34.10%. Denny’s Corporation has a consensus price target of $12.67, suggesting a potential upside of 4.94%. Given Fiesta Restaurant Group’s higher possible upside, equities research analysts clearly believe Fiesta Restaurant Group is more favorable than Denny’s Corporation.
This table compares Fiesta Restaurant Group and Denny’s Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Fiesta Restaurant Group||-2.75%||11.77%||6.95%|
Institutional & Insider Ownership
94.0% of Fiesta Restaurant Group shares are owned by institutional investors. Comparatively, 92.4% of Denny’s Corporation shares are owned by institutional investors. 2.2% of Fiesta Restaurant Group shares are owned by insiders. Comparatively, 5.2% of Denny’s Corporation 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.
Risk and Volatility
Fiesta Restaurant Group has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Denny’s Corporation has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500.
Valuation and Earnings
This table compares Fiesta Restaurant Group and Denny’s Corporation’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Fiesta Restaurant Group||$701.79 million||0.67||$69.79 million||($0.72)||-24.24|
|Denny’s Corporation||$519.28 million||1.56||$91.98 million||$0.52||23.21|
Denny’s Corporation has higher revenue, but lower earnings than Fiesta Restaurant Group. Fiesta Restaurant Group is trading at a lower price-to-earnings ratio than Denny’s Corporation, indicating that it is currently the more affordable of the two stocks.
Denny’s Corporation beats Fiesta Restaurant Group on 8 of the 13 factors compared between the two stocks.
Fiesta Restaurant Group Company Profile
Fiesta Restaurant Group, Inc. owns, operates and franchises two fast-casual restaurant brands, Pollo Tropical and Taco Cabana through its subsidiaries Pollo Operations, Inc., and its subsidiaries, and Pollo Franchise, Inc., (collectively Pollo Tropical) and Taco Cabana, Inc. and its subsidiaries (collectively Taco Cabana). The Company operates through the Pollo Tropical and Taco Cabana segments. The Company’s Pollo Tropical restaurants offer Caribbean menu items, featuring its bone-in chicken marinated in blend of tropical fruit juices and grilled over an open flame. The Company also offers catering for parties and corporate events. The Company’s Taco Cabana restaurants serves Mexican food, including flame-grilled steak and chicken fajitas served on sizzling iron skillets, quesadillas, hand-rolled flautas, enchiladas, burritos, tacos, fresh-made flour tortillas, customizable salads served in its Cabana Bowl, and its breakfast tacos.
Denny’s Corporation Company Profile
Denny’s Corporation (Denny’s) operates a franchised full-service restaurant chain. The Company, through its subsidiary, Denny’s, Inc., owns and operates the Denny’s brand. As of December 28, 2016, the Denny’s brand consisted of 1,733 franchised, licensed and Company-operated restaurants around the world, including 1,610 restaurants in the United States and 123 international locations. As of December 28, 2016, 1,564 of its restaurants were franchised or licensed and 169 were Company-operated. In addition to its breakfast-all-day items, Denny’s offers a selection of lunch and dinner items, including burgers, sandwiches, salads and skillet entrees, along with an assortment of beverages, appetizers and desserts. The Company’s Fit Fare menu helps its guests identify items suited to their dietary needs. Most Denny’s restaurants offer special items for children and seniors. The Company has restaurant locations within travel centers, primarily with Pilot and Pilot Flying J Travel Centers.
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