Zoe’s Kitchen (NYSE: ZOES) and Fiesta Restaurant Group (NASDAQ:FRGI) are both small-cap retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, profitability, dividends, institutional ownership, risk and earnings.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zoe’s Kitchen 1 5 4 0 2.30
Fiesta Restaurant Group 1 4 1 0 2.00

Zoe’s Kitchen presently has a consensus target price of $17.15, suggesting a potential upside of 27.51%. Fiesta Restaurant Group has a consensus target price of $21.60, suggesting a potential upside of 21.35%. Given Zoe’s Kitchen’s stronger consensus rating and higher probable upside, research analysts clearly believe Zoe’s Kitchen is more favorable than Fiesta Restaurant Group.

Risk and Volatility

Zoe’s Kitchen has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500. Comparatively, Fiesta Restaurant Group has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500.

Insider and Institutional Ownership

92.2% of Fiesta Restaurant Group shares are owned by institutional investors. 3.0% of Zoe’s Kitchen shares are owned by insiders. Comparatively, 2.2% of Fiesta Restaurant Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Zoe’s Kitchen and Fiesta Restaurant Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Zoe’s Kitchen $275.96 million 0.95 $1.80 million $0.01 1,346.35
Fiesta Restaurant Group $711.77 million 0.68 $16.71 million ($0.86) -20.70

Fiesta Restaurant Group has higher revenue and earnings than Zoe’s Kitchen. Fiesta Restaurant Group is trading at a lower price-to-earnings ratio than Zoe’s Kitchen, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Zoe’s Kitchen and Fiesta Restaurant Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zoe’s Kitchen 0.12% -0.66% -0.38%
Fiesta Restaurant Group -3.40% 9.49% 5.57%

Summary

Zoe’s Kitchen beats Fiesta Restaurant Group on 7 of the 13 factors compared between the two stocks.

About Zoe’s Kitchen

Zoe’s Kitchen, Inc. develops and operates fast-casual restaurants serving a menu of fresh, wholesome, Mediterranean-inspired dishes delivered with Southern hospitality. The Company’s menu offers meals made from scratch using produce, proteins and other ingredients, including its appetizers, soups, salads and kabobs. Its food, including both hot and cold items, is suited for catering to a range of business and social occasions. It caters to a range of dietary needs by offering vegetarian, vegan, gluten-free and its calorie conscious, Simply 500 menu selections. Its party packs serve groups of approximately 10 and are each filled with their own combination of fresh fruits, veggies, proteins and grains. The Company serves dishes for various occasions, such as Guilt-Free Girls Night, Game Day Goodies, Shower Sensations and Kids’ Party Pack. As of December 26, 2016, it had operated 201 Company-owned restaurants and three franchise restaurants in 20 states across the United States.

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.

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