Fiesta Restaurant Group (NASDAQ: FRGI) and Denny’s Corporation (NASDAQ:DENN) are both small-cap retail/wholesale companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, dividends, profitability and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations and price targets for Fiesta Restaurant Group and Denny’s Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fiesta Restaurant Group 1 5 1 0 2.00
Denny’s Corporation 0 2 1 0 2.33

Fiesta Restaurant Group presently has a consensus price target of $23.40, indicating a potential upside of 28.93%. Denny’s Corporation has a consensus price target of $12.67, indicating a potential upside of 6.98%. Given Fiesta Restaurant Group’s higher probable upside, analysts plainly believe Fiesta Restaurant Group is more favorable than Denny’s Corporation.

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.

Profitability

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%
Denny’s Corporation 7.34% -60.77% 13.43%

Earnings and Valuation

This table compares Fiesta Restaurant Group and Denny’s Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fiesta Restaurant Group $701.79 million 0.69 $69.79 million ($0.72) -25.21
Denny’s Corporation $519.28 million 1.53 $91.98 million $0.52 22.77

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.

Institutional & Insider Ownership

94.0% of Fiesta Restaurant Group shares are held by institutional investors. Comparatively, 92.4% of Denny’s Corporation shares are held by institutional investors. 2.2% of Fiesta Restaurant Group shares are held by company insiders. Comparatively, 5.2% of Denny’s Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Denny’s Corporation beats Fiesta Restaurant Group on 8 of the 13 factors compared between the two stocks.

About Fiesta Restaurant Group

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.

About Denny’s Corporation

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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