Bravo Brio Restaurant Group (NASDAQ: BBRG) and Extended Stay America (NYSE:STAY) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.

Profitability

This table compares Bravo Brio Restaurant Group and Extended Stay America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bravo Brio Restaurant Group -18.32% -16.41% 2.12%
Extended Stay America 5.83% 14.53% 4.74%

Insider & Institutional Ownership

43.7% of Bravo Brio Restaurant Group shares are held by institutional investors. Comparatively, 99.6% of Extended Stay America shares are held by institutional investors. 7.5% of Bravo Brio Restaurant Group shares are held by company insiders. Comparatively, 0.5% of Extended Stay America shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Bravo Brio Restaurant Group has a beta of 0.64, suggesting that its share price is 36% less volatile than the S&P 500. Comparatively, Extended Stay America has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Bravo Brio Restaurant Group and Extended Stay America, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bravo Brio Restaurant Group 1 1 0 0 1.50
Extended Stay America 0 1 7 0 2.88

Bravo Brio Restaurant Group currently has a consensus target price of $2.25, suggesting a potential downside of 8.16%. Extended Stay America has a consensus target price of $20.53, suggesting a potential upside of 24.73%. Given Extended Stay America’s stronger consensus rating and higher possible upside, analysts plainly believe Extended Stay America is more favorable than Bravo Brio Restaurant Group.

Earnings & Valuation

This table compares Bravo Brio Restaurant Group and Extended Stay America’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Bravo Brio Restaurant Group $410.25 million 0.09 -$74.71 million ($4.95) -0.49
Extended Stay America $1.27 billion 2.49 $69.93 million $0.39 42.21

Extended Stay America has higher revenue and earnings than Bravo Brio Restaurant Group. Bravo Brio Restaurant Group is trading at a lower price-to-earnings ratio than Extended Stay America, indicating that it is currently the more affordable of the two stocks.

Dividends

Extended Stay America pays an annual dividend of $0.84 per share and has a dividend yield of 5.1%. Bravo Brio Restaurant Group does not pay a dividend. Extended Stay America pays out 215.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bravo Brio Restaurant Group has raised its dividend for 2 consecutive years.

Summary

Extended Stay America beats Bravo Brio Restaurant Group on 14 of the 17 factors compared between the two stocks.

About Bravo Brio Restaurant Group

Bravo Brio Restaurant Group, Inc. is the owner and operator of approximately two Italian restaurant brands, including BRAVO! Cucina Italiana (BRAVO!) and BRIO Tuscan Grille (BRIO). The Company operates approximately 120 restaurants in over 30 states. Additionally, approximately one BRIO restaurant is operated under a franchise agreement. It has over 110 operating locations, owns approximately four locations, of which over 100 are located adjacent to or in lifestyle centers and shopping malls, and over 10 are free-standing units. Its reward programs, called MyBRAVO Rewards and MyBRIO Rewards, are designed to reward guests for their continuous dining at its restaurants. Its guests can download a MyBRAVO/MyBRIO! Rewards mobile application, register their cards at BRAVO! and BRIO locations or online at www.myBRAVOReward.com or www.myBRIOReward.com. It also operates approximately one full-service American-French bistro restaurant in Columbus, Ohio under the brand Bon Vie.

About Extended Stay America

Extended Stay America, Inc. is a owner/operator of company-branded hotels in North America. The Company operates in the extended stay lodging industry. The Company owns and operates approximately 700 hotel properties consisting of approximately 75,900 rooms located in 44 states across the United States of America and in Canada. The Company owns and operates hotels under the core brand, Extended Stay America. In addition, the Company owns and operates three Extended Stay Canada hotels, 49 hotels in the economy extended stay segment under the Crossland Economy Studios and Hometown Inn brands, and also manage two Extended Stay America hotels.

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