Analyzing Nathan’s Famous (NASDAQ:NATH) and GreenTree Hospitality Group (NYSE:GHG)

GreenTree Hospitality Group (NYSE:GHG) and Nathan’s Famous (NASDAQ:NATH) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Profitability

This table compares GreenTree Hospitality Group and Nathan’s Famous’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GreenTree Hospitality Group	4.14%	2.49%	0.84%
Nathan’s Famous	11.78%	-187.25%	34.31%

Institutional and Insider Ownership

8.1% of GreenTree Hospitality Group shares are held by institutional investors. Comparatively, 66.5% of Nathan’s Famous shares are held by institutional investors. 88.7% of GreenTree Hospitality Group shares are held by company insiders. Comparatively, 30.7% of Nathan’s Famous shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

GreenTree Hospitality Group pays an annual dividend of $0.05 per share and has a dividend yield of 4.7%. Nathan’s Famous pays an annual dividend of $2.00 per share and has a dividend yield of 2.1%. GreenTree Hospitality Group pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Nathan’s Famous pays out 41.4% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares GreenTree Hospitality Group and Nathan’s Famous”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GreenTree Hospitality Group	$156.92 million	0.69	$23.85 million	$0.05	21.38
Nathan’s Famous	$162.06 million	2.45	$20.02 million	$4.83	20.06

GreenTree Hospitality Group has higher earnings, but lower revenue than Nathan’s Famous. Nathan’s Famous is trading at a lower price-to-earnings ratio than GreenTree Hospitality Group, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

GreenTree Hospitality Group has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500. Comparatively, Nathan’s Famous has a beta of 0.29, indicating that its stock price is 71% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for GreenTree Hospitality Group and Nathan’s Famous, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GreenTree Hospitality Group	1	0	0	0	1.00
Nathan’s Famous	0	0	1	0	3.00

Summary

Nathan’s Famous beats GreenTree Hospitality Group on 9 of the 15 factors compared between the two stocks.

About GreenTree Hospitality Group

GreenTree Hospitality Group Ltd., through its subsidiaries, develops leased-and-operated, and franchised-and-managed hotels under the GreenTree Inns brand in the People's Republic of China. It also engages in investment holding activities; and provision of information technology services. The company was founded in 2004 and is headquartered in Shanghai, the People's Republic of China.

About Nathan’s Famous

Nathan’s Famous, Inc. engages in the operation of franchised fast-food units. It is involved in the licensing, wholesaling, and retailing of products marketed under the Nathan’s Famous brand. The firm operates through the following business segments: Branded Product Program, Product Licensing, Restaurant Operations, and Corporate. The Branded Product Program segment markets and sells hot dog products. The Product Licensing segment is composed of royalties from licensing a variety of Nathan’s Famous products such as hotdogs, sausage and corned beef products, frozen French fries, and additional products through retail grocery channels and club stores. The Restaurant Operations segment deals with the sale of products at company-owned restaurants and fees and royalties from franchised restaurants. The Corporate segment includes administrative expenses such as executive management, finance, information technology, legal, insurance, corporate office costs, corporate incentive compensation, and compliance costs. The company was founded by Nathan Handwerker in 1916 and is headquartered in Jericho, NY.