Bojangles’ (NASDAQ: BOJA) and Potbelly Corporation (NASDAQ:PBPB) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Profitability

This table compares Bojangles’ and Potbelly Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bojangles’ 6.70% 17.05% 6.47%
Potbelly Corporation 1.03% 8.68% 6.15%

Institutional & Insider Ownership

91.3% of Bojangles’ shares are held by institutional investors. Comparatively, 72.8% of Potbelly Corporation shares are held by institutional investors. 55.3% of Bojangles’ shares are held by company insiders. Comparatively, 9.6% of Potbelly Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and price targets for Bojangles’ and Potbelly Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bojangles’ 0 5 3 2 2.70
Potbelly Corporation 0 3 0 0 2.00

Bojangles’ presently has a consensus target price of $19.50, suggesting a potential upside of 43.38%. Potbelly Corporation has a consensus target price of $11.00, suggesting a potential downside of 5.58%. Given Bojangles”s stronger consensus rating and higher probable upside, research analysts clearly believe Bojangles’ is more favorable than Potbelly Corporation.

Valuation and Earnings

This table compares Bojangles’ and Potbelly Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Bojangles’ $538.50 million 0.93 $79.81 million $0.95 14.32
Potbelly Corporation $415.98 million 0.70 $39.72 million $0.17 68.53

Bojangles’ has higher revenue and earnings than Potbelly Corporation. Bojangles’ is trading at a lower price-to-earnings ratio than Potbelly Corporation, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Bojangles’ has a beta of 1.98, indicating that its stock price is 98% more volatile than the S&P 500. Comparatively, Potbelly Corporation has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Summary

Bojangles’ beats Potbelly Corporation on 14 of the 15 factors compared between the two stocks.

Bojangles’ Company Profile

Bojangles’, Inc. is a restaurant operator and franchisor. The Company offers food made from its Southern recipes. The Company’s menu includes its made-from-scratch, buttermilk biscuits baked fresh every 20 minutes; its fresh, never-frozen bone-in fried chicken; its fixin’s; its Bo-Smart menu featuring items, such as salads, grilled chicken sandwiches, roasted chicken bites and fat-free green beans; its freshly baked and delicious sweets menu, and its Legendary Iced Tea. The Company’s food is offered a la carte and in combos. The Company’s chicken, fixin’s, biscuits and Legendary Iced Tea may also be ordered in boxes or family meals, and larger combinations may be offered as tailgate specials or may be packaged in its Big Bo Box. The Company offers Southern style mac ‘n cheese made from two cheeses; fat-free green beans; cole slaw, and mashed potatoes with gravy. Its menu also features salads, sandwiches and its whole meat Roasted Chicken Bites.

Potbelly Corporation Company Profile

Potbelly Corporation owns and operates Potbelly Sandwich Works sandwich shops in the United States. The Company has domestic and international franchise operations of Potbelly Sandwich Works sandwich shops. As of December 25, 2016, the Company operated Potbelly Sandwich Works sandwich shops in 29 states and the District of Columbia. As of December 25, 2016, the Company had a domestic base of 441 shops in 29 states and the District of Columbia. Of these, the company operated 411 shops, and franchisees operated 30 shops, as of December 25, 2016. As of December 25, 2016, the Company had 13 international franchised shops, which included 11 shops in the Middle East, a shop in the United Kingdom and a shop in Canada. As of December 25, 2016, the Company had domestic franchise shops in Arkansas, Iowa, Illinois, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Texas and Virginia.

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