Shake Shack (NYSE: SHAK) and Zoe’s Kitchen (NYSE:ZOES) are both small-cap retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitabiliy, earnings, analyst recommendations, institutional ownership and dividends.
Earnings & Valuation
This table compares Shake Shack and Zoe’s Kitchen’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Shake Shack||$291.06 million||2.87||$44.91 million||$0.58||55.93|
|Zoe’s Kitchen||$286.11 million||0.78||$22.79 million||$0.01||1,148.00|
Shake Shack has higher revenue and earnings than Zoe’s Kitchen. Shake Shack is trading at a lower price-to-earnings ratio than Zoe’s Kitchen, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Shake Shack has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500. Comparatively, Zoe’s Kitchen has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500.
This table compares Shake Shack and Zoe’s Kitchen’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
97.5% of Shake Shack shares are held by institutional investors. 34.9% of Shake Shack shares are held by company insiders. Comparatively, 3.0% of Zoe’s Kitchen shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
This is a breakdown of current recommendations for Shake Shack and Zoe’s Kitchen, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Shake Shack presently has a consensus target price of $37.17, indicating a potential upside of 14.57%. Zoe’s Kitchen has a consensus target price of $19.33, indicating a potential upside of 68.41%. Given Zoe’s Kitchen’s higher probable upside, analysts plainly believe Zoe’s Kitchen is more favorable than Shake Shack.
Shake Shack beats Zoe’s Kitchen on 12 of the 14 factors compared between the two stocks.
About Shake Shack
Shake Shack Inc. operates roadside burger stands. The Company serves an American menu of burgers, hot dogs, crispy chicken, frozen custard, crinkle cut fries, shakes, beer and wine, among others. The Company’s signature items are its all-natural, hormone and antibiotic-free burgers, hot dogs, crispy chicken, crinkle cut fries, shakes and frozen custard. Its menu focuses on food and beverages, crafted from a range of classic American foods. The Company’s domestic menu includes a range of signature items, such as the ShackBurger, SmokeShack, Shack-cago Dog, ‘Shroom Burger, seasonal frozen custard, hand-spun shakes, concretes, ShackMeister Ale, and Shack Red and Shack White wines. As of December 28, 2016, it had 114 Shacks in 13 countries and 16 states, as well as the District of Columbia. Its burgers are made with a whole-muscle blend of all-natural, hormone and antibiotic-free Angus beef, ground fresh daily, cooked to order and served on a non-genetically modified organism potato bun.
About Zoe’s Kitchen
Zoe’s Kitchen, Inc. develops and operates fast-casual restaurants serving a menu of fresh, wholesome, Mediterranean-inspired dishes delivered with Southern hospitality. The Company’s menu offers meals made from scratch using produce, proteins and other ingredients, including its appetizers, soups, salads and kabobs. Its food, including both hot and cold items, is suited for catering to a range of business and social occasions. It caters to a range of dietary needs by offering vegetarian, vegan, gluten-free and its calorie conscious, Simply 500 menu selections. Its party packs serve groups of approximately 10 and are each filled with their own combination of fresh fruits, veggies, proteins and grains. The Company serves dishes for various occasions, such as Guilt-Free Girls Night, Game Day Goodies, Shower Sensations and Kids’ Party Pack. As of December 26, 2016, it had operated 201 Company-owned restaurants and three franchise restaurants in 20 states across the United States.
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