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

Profitability

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

Net Margins Return on Equity Return on Assets
Ruth’s Hospitality Group 8.10% 47.19% 17.15%
Zoe’s Kitchen -8.74% -9.52% -4.89%

Analyst Ratings

This is a summary of recent ratings and price targets for Ruth’s Hospitality Group and Zoe’s Kitchen, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ruth’s Hospitality Group 0 2 0 0 2.00
Zoe’s Kitchen 1 4 0 0 1.80

Ruth’s Hospitality Group currently has a consensus target price of $28.00, indicating a potential upside of 9.59%. Zoe’s Kitchen has a consensus target price of $10.92, indicating a potential upside of ∞. Given Zoe’s Kitchen’s higher probable upside, analysts clearly believe Zoe’s Kitchen is more favorable than Ruth’s Hospitality Group.

Dividends

Ruth’s Hospitality Group pays an annual dividend of $0.44 per share and has a dividend yield of 1.7%. Zoe’s Kitchen does not pay a dividend. Ruth’s Hospitality Group pays out 31.7% of its earnings in the form of a dividend. Ruth’s Hospitality Group has increased its dividend for 5 consecutive years.

Insider & Institutional Ownership

81.4% of Ruth’s Hospitality Group shares are held by institutional investors. Comparatively, 72.8% of Zoe’s Kitchen shares are held by institutional investors. 7.5% of Ruth’s Hospitality Group shares are held by company insiders. Comparatively, 4.0% of Zoe’s Kitchen shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Ruth’s Hospitality Group and Zoe’s Kitchen’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ruth’s Hospitality Group $414.82 million 1.87 $30.13 million $1.39 18.38
Zoe’s Kitchen $314.10 million 0.00 -$1.99 million ($0.10) N/A

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

Volatility & Risk

Ruth’s Hospitality Group has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, Zoe’s Kitchen has a beta of 0.33, suggesting that its stock price is 67% less volatile than the S&P 500.

Summary

Ruth’s Hospitality Group beats Zoe’s Kitchen on 13 of the 15 factors compared between the two stocks.

About Ruth’s Hospitality Group

Ruth's Hospitality Group, Inc., together with its subsidiaries, develops, operates, and franchises fine dining restaurants under the Ruth's Chris Steak House name. Its restaurants offer food and beverage products to special occasion diners and frequent customers, as well as business clientele. As of February 22, 2019, the company had approximately 150 company-owned and franchisee-owned restaurants worldwide. Ruth's Hospitality Group, Inc. was founded in 1965 and is headquartered in Winter Park, Florida.

About Zoe’s Kitchen

Zoe's Kitchen, Inc., through its subsidiaries, develops and operates a chain of fast-casual restaurants. It operates a range of restaurant formats, including in-line, end-cap, and free-standing restaurants. As of February 22, 2018, the company operated owned and franchised 249 restaurants in 20 states of the United States. Zoe's Kitchen, Inc. was founded in 1995 and is based in Plano, Texas.

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