Red Robin Gourmet Burgers (NASDAQ: RRGB) and Arcos Dorados Holdings (NYSE:ARCO) are both small-cap retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, valuation, earnings, risk, analyst recommendations and profitability.

Valuation & Earnings

This table compares Red Robin Gourmet Burgers and Arcos Dorados Holdings’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Red Robin Gourmet Burgers $1.32 billion 0.59 $137.92 million $0.64 94.69
Arcos Dorados Holdings $3.16 billion 0.60 $249.87 million $0.26 34.81

Arcos Dorados Holdings has higher revenue and earnings than Red Robin Gourmet Burgers. Arcos Dorados Holdings is trading at a lower price-to-earnings ratio than Red Robin Gourmet Burgers, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Red Robin Gourmet Burgers and Arcos Dorados Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Red Robin Gourmet Burgers 0 4 6 0 2.60
Arcos Dorados Holdings 0 0 2 0 3.00

Red Robin Gourmet Burgers currently has a consensus price target of $72.00, suggesting a potential upside of 18.81%. Arcos Dorados Holdings has a consensus price target of $9.00, suggesting a potential downside of 0.55%. Given Red Robin Gourmet Burgers’ higher probable upside, analysts plainly believe Red Robin Gourmet Burgers is more favorable than Arcos Dorados Holdings.

Profitability

This table compares Red Robin Gourmet Burgers and Arcos Dorados Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Red Robin Gourmet Burgers 0.64% 8.00% 3.18%
Arcos Dorados Holdings 1.76% 14.68% 3.69%

Institutional & Insider Ownership

41.7% of Arcos Dorados Holdings shares are owned by institutional investors. 2.7% of Red Robin Gourmet Burgers shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility & Risk

Red Robin Gourmet Burgers has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500. Comparatively, Arcos Dorados Holdings has a beta of 2.16, indicating that its share price is 116% more volatile than the S&P 500.

Summary

Arcos Dorados Holdings beats Red Robin Gourmet Burgers on 10 of the 14 factors compared between the two stocks.

Red Robin Gourmet Burgers Company Profile

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, primarily develops, operates, and franchises full-service restaurants in North America and focuses on serving selection of gourmet burgers. The Company’s menu features a line of gourmet burgers, which it makes from ground beef, as well as its line of Red’s Tavern Double Burgers and its Red Robin’s line of half-pound Angus beef burgers with various toppings. The Company also offers burgers made from chicken breasts, fish fillets, turkey patties, as well as vegetarian and vegan options. The Company offered a selection of buns, including ciabatta, gluten free, sesame, onion, whole grain, jalapeno and lettuce wraps a range of toppings, including fresh guacamole, house made barbeque sauces, aiolis, grilled pineapple, crispy onion straws, sauteed mushrooms, fried jalapenos, bruschetta salsa, coleslaw, eight different cheese choices and a fried egg, as of December 25, 2016.

Arcos Dorados Holdings Company Profile

Arcos Dorados Holdings Inc. is a McDonald’s franchisee. The Company operates or franchises over 2,140 McDonald’s-branded restaurants. It divides its operations into four geographical divisions: Brazil; the Caribbean division, consisting of Aruba, Colombia, Curacao, French Guiana, Guadeloupe, Martinique, Puerto Rico, Trinidad and Tobago, the United States Virgin Islands of Saint Croix and Saint Thomas, and Venezuela; the North Latin America division (NOLAD), consisting of Costa Rica, Mexico and Panama, and the South Latin America division (SLAD), consisting of Argentina, Chile, Ecuador, Peru and Uruguay. Its menus feature over three tiers of products: entry-level options, such as its Big Pleasures, Small Prices offerings and Almuerzos Colombianos (Colombian Lunches) in Colombia; core menu options, such as the Big Mac, Happy Meal and Quarter Pounder, and premium options, such as Big Tasty or Angus premium hamburgers and chicken sandwiches and low-calorie or low-sodium products.

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