DineEquity (NYSE: DIN) and The ONE Group Hospitality (NASDAQ:STKS) 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 institutional ownership, dividends, analyst recommendations, profitability, risk, earnings and valuation.

Institutional & Insider Ownership

92.8% of DineEquity shares are held by institutional investors. Comparatively, 14.5% of The ONE Group Hospitality shares are held by institutional investors. 2.2% of DineEquity shares are held by insiders. Comparatively, 35.9% of The ONE Group Hospitality shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares DineEquity and The ONE Group Hospitality’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DineEquity -64.74% 64.43% 4.13%
The ONE Group Hospitality -25.48% -68.30% -7.44%

Volatility & Risk

DineEquity has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500. Comparatively, The ONE Group Hospitality has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500.

Dividends

DineEquity pays an annual dividend of $3.88 per share and has a dividend yield of 7.8%. The ONE Group Hospitality does not pay a dividend. DineEquity pays out -17.8% of its earnings in the form of a dividend. The ONE Group Hospitality has raised its dividend for 2 consecutive years.

Analyst Recommendations

This is a summary of recent ratings for DineEquity and The ONE Group Hospitality, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DineEquity 0 4 2 0 2.33
The ONE Group Hospitality 0 0 0 0 N/A

DineEquity presently has a consensus target price of $58.75, suggesting a potential upside of 18.69%. Given DineEquity’s higher possible upside, analysts clearly believe DineEquity is more favorable than The ONE Group Hospitality.

Valuation & Earnings

This table compares DineEquity and The ONE Group Hospitality’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
DineEquity $633.97 million 1.40 $97.99 million ($21.83) -2.27
The ONE Group Hospitality $72.41 million 0.79 -$16.68 million ($0.80) -2.81

DineEquity has higher revenue and earnings than The ONE Group Hospitality. The ONE Group Hospitality is trading at a lower price-to-earnings ratio than DineEquity, indicating that it is currently the more affordable of the two stocks.

Summary

DineEquity beats The ONE Group Hospitality on 10 of the 15 factors compared between the two stocks.

DineEquity Company Profile

DineEquity, Inc., through its subsidiaries, owns and franchises the Applebee’s Neighborhood Grill & Bar (Applebee’s) concept in the bar and grill segment within the casual dining category of the restaurant industry, and owns, franchises and operates the International House of Pancakes (IHOP) concept in the family dining category of the restaurant industry. It operates through four segments: Franchise operations, Rental operations, Company restaurant operations and Financing operations. As of December 31, 2016, it had 3,749 restaurants. Applebee’s menu features a selection of grill and bar fare, such as appetizers, bar snacks, burgers, classic entrees and lighter fare, as well as cocktails, beers and desserts. As of December 31, 2016, IHOP franchise and area license restaurants were located in all 50 states within the United States, in the District of Columbia, in three United States territories and in 10 countries outside of the United States.

The ONE Group Hospitality Company Profile

The ONE Group Hospitality, Inc., formerly Committed Capital Acquisition Corporation, is a hospitality company. The Company develops, owns and operates restaurants and lounges, and provides food and beverage services for hospitality venues, including hotels, casinos and other locations across the globe. It operates through three segments: owned STK units (STKs), F&B hospitality management agreements (F&B), and Other concepts (Other). Its STKs segment consists of leased restaurant locations. Its F&B segment consists of management agreements, in which the Company operates the food and beverage services in hotels or casinos and could include an STK. Its Other segment includes owned non-STK leased locations. Its restaurant brand is STK, a multi-unit steakhouse concept with locations in metropolitan cities around the globe. Its F&B hospitality management services include developing, managing and operating restaurants, bars, rooftop lounges, pools, banqueting and catering facilities.

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