Noodles & (NASDAQ: NDLS) and Arcos Dorados Holdings (NYSE:ARCO) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, profitability and earnings.

Volatility and Risk

Noodles & has a beta of -0.57, meaning that its share price is 157% less volatile than the S&P 500. Comparatively, Arcos Dorados Holdings has a beta of 2.16, meaning that its share price is 116% more volatile than the S&P 500.

Earnings & Valuation

This table compares Noodles & and Arcos Dorados Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Noodles & $481.59 million 0.40 $12.41 million ($3.19) -1.52
Arcos Dorados Holdings $3.16 billion 0.61 $249.87 million $0.26 35.00

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

Profitability

This table compares Noodles & and Arcos Dorados Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Noodles & -17.42% -10.25% -2.10%
Arcos Dorados Holdings 1.76% 14.68% 3.69%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Noodles & and Arcos Dorados Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Noodles & 1 5 1 0 2.00
Arcos Dorados Holdings 0 0 3 0 3.00

Noodles & presently has a consensus price target of $4.93, suggesting a potential upside of 1.62%. Arcos Dorados Holdings has a consensus price target of $9.53, suggesting a potential upside of 4.76%. Given Arcos Dorados Holdings’ stronger consensus rating and higher possible upside, analysts clearly believe Arcos Dorados Holdings is more favorable than Noodles &.

Institutional & Insider Ownership

67.7% of Noodles & shares are held by institutional investors. Comparatively, 36.7% of Arcos Dorados Holdings shares are held by institutional investors. 52.7% of Noodles & shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Arcos Dorados Holdings beats Noodles & on 11 of the 13 factors compared between the two stocks.

About Noodles &

Noodles & Company develops and operates fast casual restaurants. The Company’s menu includes a range of cooked-to-order dishes, including noodles and pasta, soups, salads, sandwiches and appetizers. The Company has approximately 490 restaurants, including 420 Company-owned and 70 franchised locations, across 40 states, the District of Columbia and one Canadian province. The Company offers over 30 globally inspired Asian, Mediterranean and American dishes together on a single menu. The Company offers approximately 10 fresh vegetables and six proteins, including marinated steak, naturally raised pork, chicken, meatballs, shrimp and organic tofu. The Company offers Kids Meals, which includes sides, such as broccoli, carrots, fruit, applesauce and a portion of its housemade rice crispy treat. The Company’s restaurants’ locations include Arizona, California, Colorado, Delaware, New York, North Dakota, Ohio, Texas, Utah, Virginia, Washington and Wisconsin.

About Arcos Dorados Holdings

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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