Critical Survey: Meritage Hospitality Group (MHGU) vs. Nathan’s Famous (NATH)

Meritage Hospitality Group (OTCMKTS:MHGU) and Nathan’s Famous (NASDAQ:NATH) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, valuation, risk, earnings, analyst recommendations, dividends and institutional ownership.

Dividends

Nathan’s Famous pays an annual dividend of $1.00 per share and has a dividend yield of 1.5%. Meritage Hospitality Group does not pay a dividend.

Volatility and Risk

Meritage Hospitality Group has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500. Comparatively, Nathan’s Famous has a beta of 0.14, meaning that its share price is 86% less volatile than the S&P 500.

Valuation and Earnings

This table compares Meritage Hospitality Group and Nathan’s Famous’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Meritage Hospitality Group $435.30 million 0.26 $13.01 million N/A N/A
Nathan’s Famous $104.20 million 2.70 $2.63 million N/A N/A

Meritage Hospitality Group has higher revenue and earnings than Nathan’s Famous.

Insider & Institutional Ownership

42.4% of Nathan’s Famous shares are held by institutional investors. 32.4% of Nathan’s Famous 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.

Profitability

This table compares Meritage Hospitality Group and Nathan’s Famous’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Meritage Hospitality Group 3.44% 26.10% 4.04%
Nathan’s Famous 19.44% -15.45% 14.59%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Meritage Hospitality Group and Nathan’s Famous, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Meritage Hospitality Group 0 0 0 0 N/A
Nathan’s Famous 0 0 0 0 N/A

Summary

Nathan’s Famous beats Meritage Hospitality Group on 6 of the 10 factors compared between the two stocks.

Meritage Hospitality Group Company Profile

Meritage Hospitality Group Inc. operates quick-service and casual dining restaurants. The company operates restaurants under the Wendy's, Twisted Rooster, Crooked Goose, Freighters Eatery & Taproom, and Wheelhouse Kitchen & Cocktails brand names. As of November 13, 2018, it operated 314 restaurants in Arkansas, Connecticut, Florida, Georgia, Indiana, Massachusetts, Michigan, Missouri, Mississippi, North Carolina, South Carolina, Ohio, Oklahoma, Tennessee, Texas, and Virginia. The company was formerly known as Thomas Edison Inns, Inc. and changed its name to Meritage Hospitality Group Inc. in May 1996. Meritage Hospitality Group Inc. was incorporated in 1986 and is headquartered in Grand Rapids, Michigan.

Nathan’s Famous Company Profile

Nathan's Famous, Inc., together with its subsidiaries, operates in the foodservice industry. The company owns and franchises restaurants under the Nathan's Famous brand name, as well as sells products bearing the Nathan's Famous trademarks through various channels of distribution. It also has license agreements for the manufacture, distribution, marketing, and sale of Nathan's Famous branded hot dogs, sausages, and corned beef products in refrigerated consumer packages to be resold through retail channels, such as supermarkets, groceries, mass merchandisers, and club stores; and other Nathan's Famous branded refrigerated meat products in consumer packages to be resold through retail channels. In addition, the company has license agreements to manufacture Nathan's Famous branded hot dog and sausage products in bulk for use in the food service industry; for supplying Nathan's Famous natural casing and skinless hot dogs in bulk for use in the Nathan's Famous restaurant system; to manufacture proprietary spices; to manufacture and sell various products, including mustard, salsa, sauerkraut, and pickles; to produce and sell French fries and onion rings for retail sale; and to manufacture and sell miniature bagel dogs, franks-in-a-blanket, and other hors d'oeuvres through club stores, supermarkets, and other retail food stores. Further, the company sells Nathan's products directly to end users or to various foodservice distributors, as well as provides Arthur Treacher's brand fish fillets. As of March 25, 2018, its restaurant system consisted of 5 company-owned units in the New York City metropolitan area; and 276 franchised units located in 20 states and 12 foreign countries. Nathan's Famous, Inc. was founded in 1916 and is based in Jericho, New York.

Receive News & Ratings for Meritage Hospitality Group Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Meritage Hospitality Group and related companies with MarketBeat.com's FREE daily email newsletter.