Del Frisco’s Restaurant Group (NASDAQ: DFRG) and The Habit Restaurants (NASDAQ:HABT) are both small-cap retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, dividends, risk and analyst recommendations.

Risk and Volatility

Del Frisco’s Restaurant Group has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500. Comparatively, The Habit Restaurants has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500.

Institutional & Insider Ownership

99.2% of Del Frisco’s Restaurant Group shares are owned by institutional investors. Comparatively, 94.5% of The Habit Restaurants shares are owned by institutional investors. 2.4% of Del Frisco’s Restaurant Group shares are owned by insiders. Comparatively, 5.8% of The Habit Restaurants shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Del Frisco’s Restaurant Group and The Habit Restaurants, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Del Frisco’s Restaurant Group 0 3 2 0 2.40
The Habit Restaurants 0 2 4 0 2.67

Del Frisco’s Restaurant Group presently has a consensus price target of $18.75, suggesting a potential upside of 32.04%. The Habit Restaurants has a consensus price target of $19.70, suggesting a potential upside of 49.24%. Given The Habit Restaurants’ stronger consensus rating and higher probable upside, analysts plainly believe The Habit Restaurants is more favorable than Del Frisco’s Restaurant Group.

Profitability

This table compares Del Frisco’s Restaurant Group and The Habit Restaurants’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Del Frisco’s Restaurant Group 3.73% 7.39% 4.77%
The Habit Restaurants 1.64% 4.97% 2.16%

Earnings and Valuation

This table compares Del Frisco’s Restaurant Group and The Habit Restaurants’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Del Frisco’s Restaurant Group $356.76 million 0.84 $41.74 million $0.56 25.36
The Habit Restaurants $307.71 million 0.87 $29.44 million $0.25 52.80

Del Frisco’s Restaurant Group has higher revenue and earnings than The Habit Restaurants. Del Frisco’s Restaurant Group is trading at a lower price-to-earnings ratio than The Habit Restaurants, indicating that it is currently the more affordable of the two stocks.

About Del Frisco’s Restaurant Group

Del Frisco’s Restaurant Group, Inc. develops, owns and operates three contemporary, complementary restaurants: Del Frisco’s Double Eagle Steak House (Del Frisco’s), Sullivan’s Steakhouse (Sullivan’s) and Del Frisco’s Grille (the Grille). As of December 27, 2016, the Company operated 53 restaurants in 24 states and the District of Columbia in the United States. The Company’s segments include Del Frisco’s, Sullivan’s and the Grille. Del Frisco’s is a steakhouse concept in the United States. The Del Frisco’s brand’s menu includes the United States Department of Agriculture (USDA) Prime grade, wet-aged steaks hand-cut at the time of order and a range of other offerings, including prime lamb, fresh seafood, and signature side dishes and desserts. Each restaurant has a sommelier to guide diners through a wine list. As of December 27, 2016, the Company operated 12 Del Frisco’s steakhouses in nine states and the District of Columbia. Sullivan’s is a complementary concept to Del Frisco’s.

About The Habit Restaurants

The Habit Restaurants, Inc. (Habit Burger Grill) is a fast casual restaurant company. The Company is engaged in preparing made-to-order char-grilled burgers and sandwiches featuring tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame. In addition, it offers sides, shakes and malts. The Company prepares its burgers with char-grilled preparation, topped with caramelized onions, melted cheese, lettuce and tomatoes. It operates a range of restaurant formats, including end-cap, free-standing, inline, end-cap drive-thru and traditional stand-alone drive-in, primarily within suburban shopping centers and retail settings. As of December 27, 2016, the Company had 172 locations in 15 markets in 10 states and the United Arab Emirates, including franchised/licensed locations (excluding six licensed locations in Santa Barbara County, California).

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