Luby’s (NYSE: LUB) and Del Frisco’s Restaurant Group (NASDAQ:DFRG) 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, earnings, valuation, dividends, profitability, risk and analyst recommendations.

Institutional & Insider Ownership

42.9% of Luby’s shares are owned by institutional investors. Comparatively, 98.6% of Del Frisco’s Restaurant Group shares are owned by institutional investors. 35.2% of Luby’s shares are owned by company insiders. Comparatively, 2.4% of Del Frisco’s Restaurant Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Luby’s and Del Frisco’s Restaurant Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Luby’s $402.64 million 0.17 -$10.34 million ($0.92) -2.57
Del Frisco’s Restaurant Group $351.68 million 0.81 $17.76 million $0.45 29.89

Del Frisco’s Restaurant Group has higher revenue, but lower earnings than Luby’s. Luby’s is trading at a lower price-to-earnings ratio than Del Frisco’s Restaurant Group, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Luby’s has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500. Comparatively, Del Frisco’s Restaurant Group has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for Luby’s and Del Frisco’s Restaurant Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Luby’s 0 0 0 0 N/A
Del Frisco’s Restaurant Group 0 4 1 0 2.20

Del Frisco’s Restaurant Group has a consensus target price of $16.00, suggesting a potential upside of 18.96%. Given Del Frisco’s Restaurant Group’s higher possible upside, analysts clearly believe Del Frisco’s Restaurant Group is more favorable than Luby’s.

Profitability

This table compares Luby’s and Del Frisco’s Restaurant Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Luby’s -6.96% -4.97% -3.16%
Del Frisco’s Restaurant Group 3.00% 6.94% 4.29%

Summary

Del Frisco’s Restaurant Group beats Luby’s on 10 of the 12 factors compared between the two stocks.

Luby’s Company Profile

Luby’s, Inc., is a multi-branded company operating in the restaurant industry and in the contract food services industry. The Company is managed through three segments: Company-owned restaurants, franchise operations, and Culinary Contract Services (CSS). The company-owned restaurants brands are Luby’s Cafeteria, Fuddruckers, and Cheeseburger in Paradise with a couple of non-core restaurant locations under other brand names. As of August 31, 2016, the Company owned and operated 175 restaurants, with 127 in Texas and the remainder in other states. The Company offers franchises for the Fuddruckers brand. As of August 31, 2016, the number of franchised restaurants were 113. Culinary Contract Services consists of contract arrangements to manage food services for clients operating in three lines of business: healthcare, higher education, and corporate dining. As of August 31, 2016, the Company had 24 Culinary Contract Services contracts.

Del Frisco’s Restaurant Group Company Profile

Del Frisco’s Restaurant Group, Inc. develops, owns and operates three contemporary, complementary restaurants: Del Frisco’s Double Eagle Steak House (Del Frisco’s), Sullivan’s Steakhouse (Sullivan’s) and Del Frisco’s Grille (the Grille). As of December 27, 2016, the Company operated 53 restaurants in 24 states and the District of Columbia in the United States. The Company’s segments include Del Frisco’s, Sullivan’s and the Grille. Del Frisco’s is a steakhouse concept in the United States. The Del Frisco’s brand’s menu includes the United States Department of Agriculture (USDA) Prime grade, wet-aged steaks hand-cut at the time of order and a range of other offerings, including prime lamb, fresh seafood, and signature side dishes and desserts. Each restaurant has a sommelier to guide diners through a wine list. As of December 27, 2016, the Company operated 12 Del Frisco’s steakhouses in nine states and the District of Columbia. Sullivan’s is a complementary concept to Del Frisco’s.

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