Contrasting Nathan’s Famous (NASDAQ:NATH) & Red Robin Gourmet Burgers (NASDAQ:RRGB)

Nathan’s Famous (NASDAQ:NATH) and Red Robin Gourmet Burgers (NASDAQ:RRGB) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, profitability, analyst recommendations, valuation and dividends.

Profitability

This table compares Nathan’s Famous and Red Robin Gourmet Burgers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nathan’s Famous 21.59% -19.83% 15.06%
Red Robin Gourmet Burgers -0.82% 4.87% 1.62%

Institutional and Insider Ownership

41.6% of Nathan’s Famous shares are owned by institutional investors. 31.8% of Nathan’s Famous shares are owned by insiders. Comparatively, 2.1% of Red Robin Gourmet Burgers shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Nathan’s Famous and Red Robin Gourmet Burgers’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nathan’s Famous $101.85 million 3.11 $21.49 million N/A N/A
Red Robin Gourmet Burgers $1.34 billion 0.26 -$6.42 million $1.73 15.36

Nathan’s Famous has higher earnings, but lower revenue than Red Robin Gourmet Burgers.

Volatility and Risk

Nathan’s Famous has a beta of 0.29, indicating that its share price is 71% less volatile than the S&P 500. Comparatively, Red Robin Gourmet Burgers has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500.

Dividends

Nathan’s Famous pays an annual dividend of $1.40 per share and has a dividend yield of 1.9%. Red Robin Gourmet Burgers does not pay a dividend.

Analyst Ratings

This is a summary of current ratings and recommmendations for Nathan’s Famous and Red Robin Gourmet Burgers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nathan’s Famous 0 0 0 0 N/A
Red Robin Gourmet Burgers 1 5 2 0 2.13

Red Robin Gourmet Burgers has a consensus price target of $33.83, indicating a potential upside of 27.29%. Given Red Robin Gourmet Burgers’ higher possible upside, analysts plainly believe Red Robin Gourmet Burgers is more favorable than Nathan’s Famous.

Summary

Nathan’s Famous beats Red Robin Gourmet Burgers on 8 of the 13 factors compared between the two stocks.

Nathan’s Famous Company Profile

Nathan's Famous, Inc., together with its subsidiaries, operates in the foodservice industry. The company owns and franchises restaurants under the Nathan's Famous brand name, as well as sells products bearing the Nathan's Famous trademarks through various channels of distribution. It also has license agreements for the manufacture, distribution, marketing, and sale of Nathan's Famous branded hot dogs, sausages, and corned beef products in refrigerated consumer packages to be resold through retail channels, such as supermarkets, groceries, mass merchandisers, and club stores; and other Nathan's Famous branded refrigerated meat products in consumer packages to be resold through retail channels. In addition, the company has license agreements to manufacture Nathan's Famous branded hot dog and sausage products in bulk for use in the food service industry; for supplying Nathan's Famous natural casing and skinless hot dogs in bulk for use in the Nathan's Famous restaurant system; to manufacture proprietary spices; to manufacture and sell various products, including mustard, salsa, sauerkraut, and pickles; to produce and sell French fries and onion rings for retail sale; and to manufacture and sell miniature bagel dogs, franks-in-a-blanket, and other hors d'oeuvres through club stores, supermarkets, and other retail food stores. Further, the company sells Nathan's products directly to end users or to various foodservice distributors, as well as provides Arthur Treacher's brand fish fillets. As of March 25, 2018, its restaurant system consisted of 5 company-owned units in the New York City metropolitan area; and 276 franchised units located in 20 states and 12 foreign countries. Nathan's Famous, Inc. was founded in 1916 and is based in Jericho, New York.

Red Robin Gourmet Burgers Company Profile

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, develops, operates, and franchises full-service and casual-dining restaurants in the United States and Canada. The company's restaurants primarily offer burgers; various appetizers, salads, soups, seafood, and other entrees; and desserts, milkshakes, alcoholic and non-alcoholic specialty drinks, cocktails, wine, and beers. As of December 31, 2018, it operated 484 company-owned restaurants located in 39 states and 2 Canadian provinces; and had 89 casual-dining restaurants operated by franchisees in 16 states. The company was founded in 1969 and is headquartered in Greenwood Village, Colorado.

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