Critical Analysis: Rave Restaurant Group (NASDAQ:RAVE) and Dutch Bros (NYSE:BROS)

Dutch Bros (NYSE:BROS) and Rave Restaurant Group (NASDAQ:RAVE) are both retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, risk, profitability and earnings.

Institutional & Insider Ownership

85.5% of Dutch Bros shares are owned by institutional investors. Comparatively, 15.1% of Rave Restaurant Group shares are owned by institutional investors. 42.4% of Dutch Bros shares are owned by company insiders. Comparatively, 28.0% of Rave Restaurant Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Dutch Bros and Rave Restaurant Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dutch Bros	$1.28 billion	7.37	$35.26 million	$0.50	114.70
Rave Restaurant Group	$12.20 million	3.53	$2.70 million	$0.20	15.15

Dutch Bros has higher revenue and earnings than Rave Restaurant Group. Rave Restaurant Group is trading at a lower price-to-earnings ratio than Dutch Bros, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings for Dutch Bros and Rave Restaurant Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dutch Bros	0	4	16	3	2.96
Rave Restaurant Group	0	1	0	0	2.00

Dutch Bros currently has a consensus price target of $76.72, indicating a potential upside of 33.78%. Given Dutch Bros’ stronger consensus rating and higher possible upside, equities analysts plainly believe Dutch Bros is more favorable than Rave Restaurant Group.

Profitability

This table compares Dutch Bros and Rave Restaurant Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dutch Bros	4.04%	8.91%	2.64%
Rave Restaurant Group	22.44%	19.80%	16.71%

Volatility and Risk

Dutch Bros has a beta of 2.56, meaning that its share price is 156% more volatile than the S&P 500. Comparatively, Rave Restaurant Group has a beta of 0.45, meaning that its share price is 55% less volatile than the S&P 500.

Summary

Dutch Bros beats Rave Restaurant Group on 12 of the 15 factors compared between the two stocks.

About Dutch Bros

Dutch Bros Inc., together with its subsidiaries, operates and franchises drive-thru shops in the United States. The company operates through Company-Operated Shops and Franchising and Other segments. It serves through company-operated shops and online channels under Dutch Bros; Dutch Bros Coffee; Dutch Bros Rebel; Dutch Bros; and Blue Rebel brands. Dutch Bros Inc. was founded in 1992 and is headquartered in Grants Pass, Oregon.

About Rave Restaurant Group

Rave Restaurant Group, Inc., together with its subsidiaries, engages in the operation and franchising of pizza buffet, delivery/carry-out (delco), and express restaurants under the Pizza Inn and Pie Five trademarks in the United States and internationally. The company operates through three segments: Pizza Inn Franchising, Pie Five Franchising, and Company-Owned Restaurants. Its buffet restaurants are located in free standing buildings or strip centers in retail developments that offer dine-in, carryout, and catering services, as well as delivery services. The company’s delco restaurants provide delivery and carryout services and are located in shopping centers or other in-line retail developments. Its Express restaurants serve customers through various non-traditional points of sale and are located in convenience stores, food courts, college campuses, airport terminals, travel plazas, athletic facilities, or other commercial facilities. The company’s Pizza Inn Express restaurants serve customers through a non-traditional, licensed, pizza-only model called Pizza Inn Express, located at production-oriented facilities. In addition, it operates and franchises fast casual restaurants under the Pie Five Pizza Company or Pie Five trademarks. The company was formerly known as Pizza Inn Holdings, Inc. and changed its name to Rave Restaurant Group, Inc. in January 2015. Rave Restaurant Group, Inc. was founded in 1958 and is based in The Colony, Texas.