Zoe’s Kitchen (NYSE: ZOES) and Ruby Tuesday (NYSE:RT) are both small-cap retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Institutional & Insider Ownership

78.8% of Ruby Tuesday shares are owned by institutional investors. 3.0% of Zoe’s Kitchen shares are owned by insiders. Comparatively, 4.8% of Ruby Tuesday shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

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
Zoe’s Kitchen 0.15% 0.62% 0.37%
Ruby Tuesday -12.81% -4.25% -1.91%

Valuation & Earnings

This table compares Zoe’s Kitchen and Ruby Tuesday’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Zoe’s Kitchen $286.11 million 0.80 $22.79 million $0.01 1,170.00
Ruby Tuesday $976.43 million 0.13 $39.16 million ($2.08) -0.98

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.

Volatility and Risk

Zoe’s Kitchen has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500. Comparatively, Ruby Tuesday has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Zoe’s Kitchen and Ruby Tuesday, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zoe’s Kitchen 0 7 2 0 2.22
Ruby Tuesday 0 0 0 0 N/A

Zoe’s Kitchen currently has a consensus price target of $19.33, suggesting a potential upside of 65.24%. Given Zoe’s Kitchen’s higher possible upside, equities research analysts clearly believe Zoe’s Kitchen is more favorable than Ruby Tuesday.

Summary

Zoe’s Kitchen beats Ruby Tuesday on 7 of the 12 factors compared between the two stocks.

Zoe’s Kitchen Company Profile

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.

Ruby Tuesday Company Profile

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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