FAT Brands (NASDAQ:FAT) and Luby’s (NYSE:LUB) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, risk, valuation, earnings and dividends.

Insider & Institutional Ownership

1.4% of FAT Brands shares are held by institutional investors. Comparatively, 36.2% of Luby’s shares are held by institutional investors. 2.8% of FAT Brands shares are held by company insiders. Comparatively, 23.8% of Luby’s shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

FAT Brands has a beta of 2.1, meaning that its stock price is 110% more volatile than the S&P 500. Comparatively, Luby’s has a beta of 1.7, meaning that its stock price is 70% more volatile than the S&P 500.

Earnings and Valuation

This table compares FAT Brands and Luby’s’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FAT Brands $22.50 million 1.58 -$1.02 million N/A N/A
Luby’s $323.47 million 0.07 -$15.23 million N/A N/A

FAT Brands has higher earnings, but lower revenue than Luby’s.

Profitability

This table compares FAT Brands and Luby’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FAT Brands -4.52% -18.84% -1.35%
Luby’s -5.09% -24.29% -13.03%

Analyst Recommendations

This is a summary of current ratings and price targets for FAT Brands and Luby’s, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FAT Brands 0 0 0 0 N/A
Luby’s 0 0 0 0 N/A

Summary

FAT Brands beats Luby’s on 6 of the 10 factors compared between the two stocks.

FAT Brands Company Profile

FAT Brands Inc., a multi-brand franchising company, acquires, markets, and develops fast casual and casual dining restaurant concepts. As of April 22, 2019, it owned 7 restaurant brands, including Fatburger, Buffalo's Cafe, Buffalo's Express, Hurricane Grill & Wings, Yalla Mediterranean, Ponderosa Steakhouse, and Bonanza Steakhouse with approximately 300 locations open and 200 under development worldwide. The company was founded in 2017 and is headquartered in Beverly Hills, California. FAT Brands Inc. is a subsidiary of Fog Cutter Capital Group Inc.

Luby’s Company Profile

Luby's, Inc. provides restaurant services in the United States. It operates through three segments: Company-owned Restaurants, Franchise Operations, and Culinary Contract Services. The company operates casual dining restaurants; and offers culinary contract services, including contract arrangements to manage food services for healthcare clients, corporate dining clients, government buildings, and sports stadiums, as well as through retail grocery stores. Its primary brands include Luby's Cafeteria, Fuddruckers – World's Greatest Hamburgers, and Cheeseburger in Paradise, as well as Luby's Culinary Contract Services. As of August 29, 2018, the company operated 146 restaurants; and 28 locations through Culinary Contract Services, as well as franchised 105 Fuddruckers restaurants. The company was formerly known as Luby's Cafeterias, Inc. Luby's, Inc. was founded in 1947 and is headquartered in Houston, Texas.

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