FAT Brands (NASDAQ:FATBB) versus Friedman Industries (NASDAQ:FRD) Financial Analysis

Friedman Industries (NASDAQ:FRD) and FAT Brands (NASDAQ:FATBB) are both small-cap materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, earnings, dividends, profitability and risk.

Dividends

Friedman Industries pays an annual dividend of $0.16 per share and has a dividend yield of 0.4%. FAT Brands pays an annual dividend of $0.14 per share and has a dividend yield of 15.8%. Friedman Industries pays out 4.2% of its earnings in the form of a dividend. FAT Brands pays out -1.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Friedman Industries has increased its dividend for 1 consecutive years. FAT Brands is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

33.3% of Friedman Industries shares are owned by institutional investors. 6.6% of Friedman Industries shares are owned by insiders. Comparatively, 59.9% of FAT Brands shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Friedman Industries and FAT Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Friedman Industries	3.63%	18.29%	8.19%
FAT Brands	-39.33%	N/A	-17.57%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Friedman Industries and FAT Brands, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Friedman Industries	0	0	1	0	3.00
FAT Brands	1	0	0	0	1.00

Earnings & Valuation

This table compares Friedman Industries and FAT Brands”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Friedman Industries	$646.91 million	0.50	$19.53 million	$3.84	11.60
FAT Brands	$574.14 million	0.03	-$189.85 million	($13.35)	-0.07

Friedman Industries has higher revenue and earnings than FAT Brands. FAT Brands is trading at a lower price-to-earnings ratio than Friedman Industries, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Friedman Industries has a beta of 1.62, meaning that its share price is 62% more volatile than the S&P 500. Comparatively, FAT Brands has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.

Summary

Friedman Industries beats FAT Brands on 13 of the 16 factors compared between the two stocks.

About Friedman Industries

Friedman Industries, Incorporated engages in steel processing, pipe manufacturing and processing, and the steel and pipe distribution businesses the United States. It operates in two segments, Coil and Tubular. The Coil segment is involved in the conversion of steel coils into flat sheet and plate steel cut to customer specifications and reselling steel coils. This segment also processes customer-owned coils on a fee basis. The company sells coil products and processing services to approximately 200 customers located primarily in the midwestern, southwestern and southeastern regions of the United States. Its principal customers for these products and services are steel distributors and customers manufacturing steel products, such as steel buildings, railroad cars, barges, tanks and containers, trailers, component parts and other fabricated steel products. The Tubular segment manufactures line and oil country pipes, as well as pipes for structural applications. This segment sells its tubular products principally to steel and pipe distributors through its own sales force. The company was incorporated in 1965 and is headquartered in Longview, Texas.

About FAT Brands

FAT Brands Inc., a multi-brand restaurant franchising company, acquires, develops, markets, and manages quick service, fast casual, casual dining, and polished casual dining restaurant concepts worldwide. It owns restaurant brands, including Round Table Pizza, Marble Slab Creamery, Great American Cookies, Hot Dog on a Stick, Pretzelmaker, Fazoli's, Fatburger, Johnny Rockets, Elevation Burger, Yalla Mediterranean, Buffalo's Cafe and Buffalo's Express, Hurricane Grill & Wings, Ponderosa Steakhouse/Bonanza Steakhouse, Native Grill & Wings, Smokey Bones, and Twin Peaks. The company was incorporated in 2017 and is headquartered in Beverly Hills, California. FAT Brands Inc. is a subsidiary of Fog Cutter Holdings, LLC.