Zoe’s Kitchen (NYSE: ZOES) and Ruby Tuesday (NYSE:RT) are both small-cap retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, risk, earnings, dividends and institutional ownership.
This table compares Zoe’s Kitchen and Ruby Tuesday’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility and Risk
Zoe’s Kitchen has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500. Comparatively, Ruby Tuesday has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500.
Earnings & Valuation
This table compares Zoe’s Kitchen and Ruby Tuesday’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Zoe’s Kitchen||$286.11 million||0.77||$22.79 million||$0.01||1,125.00|
|Ruby Tuesday||$976.43 million||0.12||$39.16 million||($2.08)||-0.92|
Ruby Tuesday has higher revenue and earnings than Zoe’s Kitchen. Ruby Tuesday 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.
This is a breakdown of current recommendations for Zoe’s Kitchen and Ruby Tuesday, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Zoe’s Kitchen presently has a consensus price target of $17.67, indicating a potential upside of 57.04%. Given Zoe’s Kitchen’s higher probable upside, research analysts clearly believe Zoe’s Kitchen is more favorable than Ruby Tuesday.
Institutional and Insider Ownership
77.4% of Ruby Tuesday shares are held by institutional investors. 3.0% of Zoe’s Kitchen shares are held by company insiders. Comparatively, 4.8% of Ruby Tuesday shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Zoe’s Kitchen beats Ruby Tuesday on 7 of the 12 factors compared between the two stocks.
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.
About Ruby Tuesday
Ruby Tuesday, Inc. owns and operates Ruby Tuesday casual dining and Lime Fresh Mexican Grill (Lime Fresh) casual restaurants. The Company also franchises the Ruby Tuesday concept in selected domestic and international markets, and the Lime Fresh concept in selected domestic markets. Its segments include Ruby Tuesday concept and Lime Fresh concept. As of March 1, 2016, the Company operated 729 Ruby Tuesday restaurants in 44 states, 13 foreign countries, and Guam, and there were 16 Lime Fresh restaurants in two states. Of those restaurants, it owned and operated approximately 649 Ruby Tuesday restaurants and franchised over 80 Ruby Tuesday restaurants, which consisted of 28 domestic and 52 international restaurants. It also owned and operated over eight Lime Fresh restaurants and franchised eight Lime Fresh domestic restaurants. The Company’s corporate-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic and Midwest of the United States.
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