Ruth’s Hospitality Group (NASDAQ:RUTH) and Nathan’s Famous (NASDAQ:NATH) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, earnings, institutional ownership, risk, analyst recommendations and valuation.
Institutional & Insider Ownership
82.0% of Ruth’s Hospitality Group shares are held by institutional investors. Comparatively, 42.0% of Nathan’s Famous shares are held by institutional investors. 7.2% of Ruth’s Hospitality Group shares are held by company insiders. Comparatively, 32.4% of Nathan’s Famous shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
This table compares Ruth’s Hospitality Group and Nathan’s Famous’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Ruth’s Hospitality Group||$452.33 million||1.52||$41.68 million||$1.39||16.22|
|Nathan’s Famous||$101.85 million||3.08||$21.49 million||N/A||N/A|
Ruth’s Hospitality Group has higher revenue and earnings than Nathan’s Famous.
This is a breakdown of recent recommendations and price targets for Ruth’s Hospitality Group and Nathan’s Famous, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ruth’s Hospitality Group||0||3||0||0||2.00|
Ruth’s Hospitality Group presently has a consensus price target of $28.00, suggesting a potential upside of 24.17%. Given Ruth’s Hospitality Group’s higher probable upside, research analysts clearly believe Ruth’s Hospitality Group is more favorable than Nathan’s Famous.
Volatility & Risk
Ruth’s Hospitality Group has a beta of 0.59, suggesting that its stock price is 41% less volatile than the S&P 500. Comparatively, Nathan’s Famous has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500.
This table compares Ruth’s Hospitality Group and Nathan’s Famous’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ruth’s Hospitality Group||9.21%||45.79%||14.72%|
Ruth’s Hospitality Group pays an annual dividend of $0.52 per share and has a dividend yield of 2.3%. Nathan’s Famous pays an annual dividend of $1.40 per share and has a dividend yield of 1.9%. Ruth’s Hospitality Group pays out 37.4% of its earnings in the form of a dividend. Ruth’s Hospitality Group has increased its dividend for 5 consecutive years. Ruth’s Hospitality Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Ruth’s Hospitality Group beats Nathan’s Famous on 8 of the 14 factors compared between the two stocks.
About Ruth’s Hospitality Group
Ruth's Hospitality Group, Inc., together with its subsidiaries, develops, operates, and franchises fine dining restaurants under the Ruth's Chris Steak House name. Its restaurants offer food and beverage products to special occasion diners and frequent customers, as well as business clientele. As of February 22, 2019, the company had approximately 150 company-owned and franchisee-owned restaurants worldwide. Ruth's Hospitality Group, Inc. was founded in 1965 and is headquartered in Winter Park, Florida.
About Nathan’s Famous
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.
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