Critical Review: BJ’s Restaurants (NASDAQ:BJRI) versus Nathan’s Famous (NASDAQ:NATH)

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

Insider and Institutional Ownership

42.0% of Nathan’s Famous shares are held by institutional investors. 2.3% of BJ’s Restaurants shares are held by insiders. Comparatively, 32.4% of Nathan’s Famous shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

BJ’s Restaurants pays an annual dividend of $0.48 per share and has a dividend yield of 1.2%. Nathan’s Famous pays an annual dividend of $1.40 per share and has a dividend yield of 1.8%. BJ’s Restaurants pays out 20.4% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current recommendations for BJ’s Restaurants and Nathan’s Famous, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BJ’s Restaurants 2 4 7 0 2.38
Nathan’s Famous 0 0 0 0 N/A

BJ’s Restaurants presently has a consensus price target of $60.67, suggesting a potential upside of 50.91%. Given BJ’s Restaurants’ higher possible upside, equities research analysts plainly believe BJ’s Restaurants is more favorable than Nathan’s Famous.

Volatility and Risk

BJ’s Restaurants has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500. Comparatively, Nathan’s Famous has a beta of 0.27, indicating that its share price is 73% less volatile than the S&P 500.

Profitability

This table compares BJ’s Restaurants and Nathan’s Famous’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BJ’s Restaurants 4.34% 15.86% 6.37%
Nathan’s Famous 21.10% -17.91% 15.50%

Earnings and Valuation

This table compares BJ’s Restaurants and Nathan’s Famous’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BJ’s Restaurants $1.12 billion 0.75 $50.81 million $2.35 17.11
Nathan’s Famous $101.85 million 3.14 $21.49 million N/A N/A

BJ’s Restaurants has higher revenue and earnings than Nathan’s Famous.

Summary

Nathan’s Famous beats BJ’s Restaurants on 8 of the 14 factors compared between the two stocks.

About BJ’s Restaurants

BJ's Restaurants, Inc. owns and operates casual dining restaurants in the United States. Its restaurants offer pizzas, craft and other beers, appetizers, entrées, pastas, sandwiches, specialty salads, and desserts. As of April 16, 2019, the company owned and operated 204 casual dining restaurants that offer dine-in, take-out, delivery, and party catering services in 27 states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, and Washington. BJ's Restaurants, Inc. was founded in 1978 and is based in Huntington Beach, California.

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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