Critical Survey: Good Times Restaurants (NASDAQ:GTIM) versus Arcos Dorados (NASDAQ:ARCO)

Good Times Restaurants (NASDAQ:GTIM) and Arcos Dorados (NYSE:ARCO) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Institutional & Insider Ownership

11.9% of Good Times Restaurants shares are owned by institutional investors. Comparatively, 39.1% of Arcos Dorados shares are owned by institutional investors. 24.5% of Good Times Restaurants shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Good Times Restaurants and Arcos Dorados’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Good Times Restaurants $99.24 million 0.20 -$1.03 million ($0.08) -20.00
Arcos Dorados $3.08 billion 0.49 $36.85 million $0.18 41.06

Arcos Dorados has higher revenue and earnings than Good Times Restaurants. Good Times Restaurants is trading at a lower price-to-earnings ratio than Arcos Dorados, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Good Times Restaurants has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, Arcos Dorados has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500.

Dividends

Arcos Dorados pays an annual dividend of $0.12 per share and has a dividend yield of 1.6%. Good Times Restaurants does not pay a dividend. Arcos Dorados pays out 66.7% of its earnings in the form of a dividend.

Profitability

This table compares Good Times Restaurants and Arcos Dorados’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Good Times Restaurants -1.18% -3.69% -2.11%
Arcos Dorados 1.90% 14.86% 2.59%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Good Times Restaurants and Arcos Dorados, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Good Times Restaurants 0 0 2 0 3.00
Arcos Dorados 0 0 3 0 3.00

Good Times Restaurants currently has a consensus target price of $5.75, suggesting a potential upside of 259.38%. Arcos Dorados has a consensus target price of $9.75, suggesting a potential upside of 31.76%. Given Good Times Restaurants’ higher probable upside, analysts plainly believe Good Times Restaurants is more favorable than Arcos Dorados.

Summary

Arcos Dorados beats Good Times Restaurants on 12 of the 15 factors compared between the two stocks.

Good Times Restaurants Company Profile

Good Times Restaurants Inc., through its subsidiaries, engages in the restaurant business in the United States. The company operates Good Times Burgers & Frozen Custard, a regional chain of quick service restaurants; and owns, operates, franchises, and licenses Bad Daddy's Burger Bar, a full service, upscale, ‘small box' restaurant concept. As of January 10, 2019, it operated and franchised a total of 35 restaurants under the Good Times Burgers & Frozen Custard name; and 35 Bad Daddy's Burger Bar restaurants. The company was founded in 1986 and is based in Lakewood, Colorado.

Arcos Dorados Company Profile

Arcos Dorados Holdings Inc. operates as a franchisee of McDonald's restaurants. It has the exclusive right to own, operate, and grant franchises of McDonald's restaurants in 20 countries and territories in Latin America and the Caribbean, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curaçao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Trinidad and Tobago, Uruguay, the United States Virgin Islands of St. Croix and St. Thomas, and Venezuela. As of March 27, 2019, the company operated or franchised approximately 2,200 McDonald's-branded restaurants in Latin America. Arcos Dorados Holdings Inc. was founded in 2007 and is based in Montevideo, Uruguay.

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