Potbelly Corporation (NASDAQ: PBPB) and Bojangles’ (NASDAQ:BOJA) are both small-cap retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Analyst Ratings

This is a breakdown of recent recommendations for Potbelly Corporation and Bojangles’, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Potbelly Corporation 0 3 0 0 2.00
Bojangles’ 0 5 3 2 2.70

Potbelly Corporation currently has a consensus target price of $11.00, indicating a potential downside of 6.78%. Bojangles’ has a consensus target price of $19.50, indicating a potential upside of 47.17%. Given Bojangles”s stronger consensus rating and higher possible upside, analysts clearly believe Bojangles’ is more favorable than Potbelly Corporation.

Institutional and Insider Ownership

72.8% of Potbelly Corporation shares are owned by institutional investors. Comparatively, 91.3% of Bojangles’ shares are owned by institutional investors. 9.6% of Potbelly Corporation shares are owned by company insiders. Comparatively, 55.3% of Bojangles’ shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Potbelly Corporation has a beta of 0.91, indicating that its share price is 9% less volatile than the S&P 500. Comparatively, Bojangles’ has a beta of 1.98, indicating that its share price is 98% more volatile than the S&P 500.

Valuation & Earnings

This table compares Potbelly Corporation and Bojangles”s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Potbelly Corporation $415.98 million 0.71 $39.72 million $0.17 69.42
Bojangles’ $538.50 million 0.91 $79.81 million $0.95 13.95

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

Profitability

This table compares Potbelly Corporation and Bojangles”s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Potbelly Corporation 1.03% 8.68% 6.15%
Bojangles’ 6.70% 17.05% 6.47%

Summary

Bojangles’ beats Potbelly Corporation on 14 of the 15 factors compared between the two stocks.

Potbelly Corporation Company Profile

Potbelly Corporation owns and operates Potbelly Sandwich Works sandwich shops in the United States. The Company has domestic and international franchise operations of Potbelly Sandwich Works sandwich shops. As of December 25, 2016, the Company operated Potbelly Sandwich Works sandwich shops in 29 states and the District of Columbia. As of December 25, 2016, the Company had a domestic base of 441 shops in 29 states and the District of Columbia. Of these, the company operated 411 shops, and franchisees operated 30 shops, as of December 25, 2016. As of December 25, 2016, the Company had 13 international franchised shops, which included 11 shops in the Middle East, a shop in the United Kingdom and a shop in Canada. As of December 25, 2016, the Company had domestic franchise shops in Arkansas, Iowa, Illinois, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Texas and Virginia.

Bojangles’ Company Profile

Bojangles’, Inc. is a restaurant operator and franchisor. The Company offers food made from its Southern recipes. The Company’s menu includes its made-from-scratch, buttermilk biscuits baked fresh every 20 minutes; its fresh, never-frozen bone-in fried chicken; its fixin’s; its Bo-Smart menu featuring items, such as salads, grilled chicken sandwiches, roasted chicken bites and fat-free green beans; its freshly baked and delicious sweets menu, and its Legendary Iced Tea. The Company’s food is offered a la carte and in combos. The Company’s chicken, fixin’s, biscuits and Legendary Iced Tea may also be ordered in boxes or family meals, and larger combinations may be offered as tailgate specials or may be packaged in its Big Bo Box. The Company offers Southern style mac ‘n cheese made from two cheeses; fat-free green beans; cole slaw, and mashed potatoes with gravy. Its menu also features salads, sandwiches and its whole meat Roasted Chicken Bites.

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