The Cheesecake Factory (NASDAQ: CAKE) and Chanticleer Holdings (NASDAQ:HOTR) 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 valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.

Risk and Volatility

The Cheesecake Factory has a beta of 0.34, indicating that its share price is 66% less volatile than the S&P 500. Comparatively, Chanticleer Holdings has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500.

Dividends

The Cheesecake Factory pays an annual dividend of $1.16 per share and has a dividend yield of 2.8%. Chanticleer Holdings does not pay a dividend. The Cheesecake Factory pays out 40.7% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current ratings and target prices for The Cheesecake Factory and Chanticleer Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Cheesecake Factory 1 12 5 0 2.22
Chanticleer Holdings 0 0 0 0 N/A

The Cheesecake Factory currently has a consensus price target of $54.24, suggesting a potential upside of 33.09%. Given The Cheesecake Factory’s higher probable upside, research analysts clearly believe The Cheesecake Factory is more favorable than Chanticleer Holdings.

Valuation & Earnings

This table compares The Cheesecake Factory and Chanticleer Holdings’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Cheesecake Factory $2.30 billion 0.81 $283.91 million $2.85 14.30
Chanticleer Holdings $41.46 million 0.14 -$378,264.00 ($2.58) -0.91

The Cheesecake Factory has higher revenue and earnings than Chanticleer Holdings. Chanticleer Holdings is trading at a lower price-to-earnings ratio than The Cheesecake Factory, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares The Cheesecake Factory and Chanticleer Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Cheesecake Factory 6.10% 22.92% 11.11%
Chanticleer Holdings -14.01% -38.80% -16.45%

Insider and Institutional Ownership

96.4% of The Cheesecake Factory shares are owned by institutional investors. Comparatively, 4.0% of Chanticleer Holdings shares are owned by institutional investors. 8.5% of The Cheesecake Factory shares are owned by company insiders. Comparatively, 2.5% of Chanticleer Holdings shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

The Cheesecake Factory beats Chanticleer Holdings on 12 of the 14 factors compared between the two stocks.

The Cheesecake Factory Company Profile

The Cheesecake Factory Incorporated is engaged in the restaurant and bakery business. As of March 2, 2017, the Company operated 208 Company-owned restaurants: 194 under The Cheesecake Factory mark, 13 under the Grand Lux Cafe mark and one under the Rock Sugar Pan Asian Kitchen mark. The Company’s segments include The Cheesecake Factory restaurants, and other. It also operates bakery production facilities, which produce desserts for its restaurants, international licensees and third-party bakery customers. Its restaurants offer lunch and dinner, as well as Sunday brunch. Its restaurants also offer a bar. As of January 3, 2017, its menu consisted of over 200 items in addition to items presented on supplemental menus, such as its SkinnyLicious menu, which offers approximately 50 items. Its Grand Lux Cafe is a casual dining concept that offers artisan cuisine. It offers appetizers, seafood and steaks.

Chanticleer Holdings Company Profile

Chanticleer Holdings, Inc. is engaged in the business of owning, operating and franchising fast casual dining concepts domestically and internationally. The Company’s brands include Hooters, American Burger Company (ABC), BGR: the Burger Joint (BGR), BT’s Burger Joint (BT), Little Big Burger (LBB) and Just Fresh. Hooters restaurants are casual beach-themed establishments featuring music, sports on large flat screens, and a menu that includes seafood, burgers, salads and Hooters original chicken wings. ABC is a fast casual dining chain located in North Carolina, South Carolina and New York. BGR consists of approximately 10 Company-owned locations in the United States and over 13 franchisee-operated locations in the United States and the Middle East. LBB consists of approximately eight locations in Oregon. Just Fresh consists of approximately seven Company owned locations in Charlotte, North Carolina.

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