Ruby Tuesday (NYSE: RT) and Potbelly Corp (NASDAQ:PBPB) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, risk, valuation and dividends.

Analyst Ratings

This is a summary of current recommendations and price targets for Ruby Tuesday and Potbelly Corp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ruby Tuesday 0 0 0 0 N/A
Potbelly Corp 0 3 1 0 2.25

Potbelly Corp has a consensus price target of $13.67, indicating a potential upside of 11.11%. Given Potbelly Corp’s higher possible upside, analysts plainly believe Potbelly Corp is more favorable than Ruby Tuesday.

Insider and Institutional Ownership

76.1% of Ruby Tuesday shares are held by institutional investors. Comparatively, 72.8% of Potbelly Corp shares are held by institutional investors. 4.8% of Ruby Tuesday shares are held by insiders. Comparatively, 9.6% of Potbelly Corp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Ruby Tuesday and Potbelly Corp’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ruby Tuesday $951.97 million 0.14 $29.49 million ($1.76) -1.22
Potbelly Corp $415.98 million 0.74 $39.72 million $0.17 72.36

Potbelly Corp has higher revenue, but lower earnings than Ruby Tuesday. Ruby Tuesday is trading at a lower price-to-earnings ratio than Potbelly Corp, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Ruby Tuesday has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500. Comparatively, Potbelly Corp has a beta of 0.91, suggesting that its stock price is 9% less volatile than the S&P 500.

Profitability

This table compares Ruby Tuesday and Potbelly Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ruby Tuesday -11.15% -5.30% -2.30%
Potbelly Corp -0.06% -0.45% -0.14%

Summary

Potbelly Corp beats Ruby Tuesday on 10 of the 12 factors compared between the two stocks.

About Ruby Tuesday

Ruby Tuesday, Inc. owns and operates Ruby Tuesday casual dining and Lime Fresh Mexican Grill (Lime Fresh) casual restaurants. The Company also franchises the Ruby Tuesday concept in selected domestic and international markets, and the Lime Fresh concept in selected domestic markets. Its segments include Ruby Tuesday concept and Lime Fresh concept. As of March 1, 2016, the Company operated 729 Ruby Tuesday restaurants in 44 states, 13 foreign countries, and Guam, and there were 16 Lime Fresh restaurants in two states. Of those restaurants, it owned and operated approximately 649 Ruby Tuesday restaurants and franchised over 80 Ruby Tuesday restaurants, which consisted of 28 domestic and 52 international restaurants. It also owned and operated over eight Lime Fresh restaurants and franchised eight Lime Fresh domestic restaurants. The Company’s corporate-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic and Midwest of the United States.

About Potbelly Corp

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.

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