Head to Head Contrast: FAT Brands (NASDAQ:FAT) and Shake Shack (NYSE:SHAK)

Shake Shack (NYSE:SHAK) and FAT Brands (NASDAQ:FAT) are both retail/wholesale companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares Shake Shack and FAT Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shake Shack	1.50%	9.78%	2.83%
FAT Brands	-36.77%	N/A	-16.49%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Shake Shack and FAT Brands, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shake Shack	3	12	6	1	2.23
FAT Brands	1	1	1	0	2.00

Shake Shack presently has a consensus target price of $123.00, indicating a potential upside of 33.82%. FAT Brands has a consensus target price of $10.00, indicating a potential upside of 426.32%. Given FAT Brands’ higher probable upside, analysts clearly believe FAT Brands is more favorable than Shake Shack.

Institutional & Insider Ownership

86.1% of Shake Shack shares are held by institutional investors. Comparatively, 6.9% of FAT Brands shares are held by institutional investors. 8.5% of Shake Shack shares are held by company insiders. Comparatively, 14.4% of FAT Brands shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Shake Shack has a beta of 1.65, meaning that its stock price is 65% more volatile than the S&P 500. Comparatively, FAT Brands has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500.

Valuation & Earnings

This table compares Shake Shack 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
Shake Shack	$1.32 billion	2.97	$10.21 million	$0.46	199.81
FAT Brands	$577.50 million	0.06	-$189.85 million	($12.70)	-0.15

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

Summary

Shake Shack beats FAT Brands on 13 of the 15 factors compared between the two stocks.

About Shake Shack

Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally. Its Shacks offers hamburgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine, and other products. The company was founded in 2001 and is headquartered in New York, New York.

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.