CEC Entertainment (NYSE: CEC) and Papa Murphy’s Holdings (NASDAQ:FRSH) are both small-cap companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.

Profitability

This table compares CEC Entertainment and Papa Murphy’s Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CEC Entertainment N/A N/A N/A
Papa Murphy’s Holdings -9.72% 5.05% 1.83%

Institutional and Insider Ownership

31.3% of Papa Murphy’s Holdings shares are owned by institutional investors. 3.1% of Papa Murphy’s Holdings shares are owned 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.

Analyst Recommendations

This is a breakdown of current ratings for CEC Entertainment and Papa Murphy’s Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CEC Entertainment 0 0 0 0 N/A
Papa Murphy’s Holdings 0 2 0 0 2.00

Papa Murphy’s Holdings has a consensus target price of $4.75, indicating a potential downside of 20.57%.

Volatility and Risk

CEC Entertainment has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, Papa Murphy’s Holdings has a beta of 0.03, meaning that its share price is 97% less volatile than the S&P 500.

Earnings & Valuation

This table compares CEC Entertainment and Papa Murphy’s Holdings’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
CEC Entertainment N/A N/A N/A $2.73 N/A
Papa Murphy’s Holdings $126.88 million 0.80 $2.64 million ($0.71) -8.42

Papa Murphy’s Holdings has higher revenue and earnings than CEC Entertainment. Papa Murphy’s Holdings is trading at a lower price-to-earnings ratio than CEC Entertainment, indicating that it is currently the more affordable of the two stocks.

Summary

Papa Murphy’s Holdings beats CEC Entertainment on 5 of the 8 factors compared between the two stocks.

About CEC Entertainment

CEC Entertainment, Inc. is engaged in the family dining and entertainment center business. The Company develops, operates and franchises family dining and entertainment centers under the name Chuck E. Cheese’s. Chuck E. Cheese’s stores feature musical and comic entertainment by robotic and animated characters, arcade-style and skill-oriented games, video games, rides and other activities. All of its stores offer dining selections consisting of a range of beverages, pizzas, sandwiches, appetizers, a salad bar and desserts. As of January 1, 2012, the Company and its franchisees operated a total of 556 Chuck E. Cheese’s stores. As of January 1, 2012, it operated 507 Company-owned Chuck E. Cheese’s stores located in 44 states and Canada and its franchisees operated a total of 49 stores located in 15 states, Puerto Rico, Guam, Guatemala, Chile, Saudi Arabia and the United Arab Emirates. In February 2014, Apollo Global Management, LLC completed the acquisition of CEC Entertainment Inc.

About Papa Murphy’s Holdings

Papa Murphy’s Holdings, Inc. is a holding company. The Company, together with its subsidiaries, is a franchisor and operator of the Take ‘N’ Bake pizza chain in the United States. The Company franchises the right to operate Take ‘N’ Bake pizza franchises and operates Take ‘N’ Bake pizza stores owned by the Company. The Company operates through three segments: Domestic Company Stores, Domestic Franchise and International. Its Domestic Franchise segment consists of its domestic franchised stores, which represent its system-wide stores and derives its revenues from franchise and development fees and the collection of franchise royalties. The Domestic Company Stores segment consists of its Company-owned stores in the United States and derives its revenues from retail sales of pizza and side items to the general public. Its International segment consists of its stores outside of the United States, all of which are franchised and derives its revenues from franchise and development fees.

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