Papa Murphy’s (FRSH) & Bloomin’ Brands (BLMN) Critical Review

Papa Murphy’s (NASDAQ:FRSH) and Bloomin’ Brands (NASDAQ:BLMN) 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 dividends, institutional ownership, valuation, profitability, analyst recommendations, earnings and risk.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Papa Murphy’s and Bloomin’ Brands, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Papa Murphy’s 0 0 0 0 N/A
Bloomin’ Brands 1 4 5 0 2.40

Bloomin’ Brands has a consensus target price of $21.63, suggesting a potential upside of 10.11%. Given Bloomin’ Brands’ higher probable upside, analysts plainly believe Bloomin’ Brands is more favorable than Papa Murphy’s.

Institutional and Insider Ownership

57.4% of Papa Murphy’s shares are owned by institutional investors. Comparatively, 94.8% of Bloomin’ Brands shares are owned by institutional investors. 13.1% of Papa Murphy’s shares are owned by company insiders. Comparatively, 4.4% of Bloomin’ Brands shares are owned by company 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 Papa Murphy’s and Bloomin’ Brands’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Papa Murphy’s $126.43 million 0.66 $4.32 million $0.43 11.37
Bloomin’ Brands $4.13 billion 0.44 $107.10 million $1.50 13.09

Bloomin’ Brands has higher revenue and earnings than Papa Murphy’s. Papa Murphy’s is trading at a lower price-to-earnings ratio than Bloomin’ Brands, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Papa Murphy’s has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500. Comparatively, Bloomin’ Brands has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500.

Dividends

Bloomin’ Brands pays an annual dividend of $0.40 per share and has a dividend yield of 2.0%. Papa Murphy’s does not pay a dividend. Bloomin’ Brands pays out 26.7% of its earnings in the form of a dividend. Bloomin’ Brands has increased its dividend for 3 consecutive years.

Profitability

This table compares Papa Murphy’s and Bloomin’ Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Papa Murphy’s 3.42% 7.54% 2.94%
Bloomin’ Brands 2.60% 178.97% 5.83%

Summary

Bloomin’ Brands beats Papa Murphy’s on 11 of the 16 factors compared between the two stocks.

About Papa Murphy’s

Papa Murphy's Holdings, Inc., together with its subsidiaries, owns, operates, and franchises Take ‘N' Bake pizza stores. The company operates in three segments: Franchise, Company Stores, and Brand Funds. As of December 31, 2018, it operated approximately 1,437 stores, including 1,294 franchised and 106 company-owned stores in 37 states, as well as 12 stores in Canada and 25 stores in the Middle East. The company was founded in 1981 and is headquartered in Vancouver, Washington.

About Bloomin’ Brands

Bloomin' Brands, Inc., through its subsidiaries, owns and operates casual, upscale casual, and fine dining restaurants in the United States and internationally. The company operates through two segments, U.S. and International. Its restaurant portfolio has four concepts, including Outback Steakhouse, a casual steakhouse restaurant; Carrabba's Italian Grill, a casual Italian restaurant; Bonefish Grill, an upscale casual seafood restaurant; and Fleming's Prime Steakhouse & Wine Bar, a contemporary steakhouse. As of December 31, 2017, the company owned and operated 1,075 restaurants and franchised 165 restaurants. Bloomin' Brands, Inc. was incorporated in 2006 and is headquartered in Tampa, Florida.

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