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

Institutional & Insider Ownership

85.7% of Fogo de Chao shares are held by institutional investors. 2.7% of Red Robin Gourmet Burgers shares are held by insiders. Comparatively, 82.8% of Fogo de Chao shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Red Robin Gourmet Burgers and Fogo de Chao’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Red Robin Gourmet Burgers $1.32 billion 0.62 $131.93 million $0.64 98.60
Fogo de Chao $304.00 million 1.15 $52.73 million $0.79 15.70

Red Robin Gourmet Burgers has higher revenue and earnings than Fogo de Chao. Fogo de Chao 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.

Risk & Volatility

Red Robin Gourmet Burgers has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500. Comparatively, Fogo de Chao has a beta of 0.38, suggesting that its stock price is 62% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Red Robin Gourmet Burgers and Fogo de Chao, 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
Fogo de Chao 0 3 3 0 2.50

Red Robin Gourmet Burgers currently has a consensus price target of $72.67, suggesting a potential upside of 15.16%. Fogo de Chao has a consensus price target of $16.42, suggesting a potential upside of 32.39%. Given Fogo de Chao’s higher possible upside, analysts clearly believe Fogo de Chao is more favorable than Red Robin Gourmet Burgers.

Profitability

This table compares Red Robin Gourmet Burgers and Fogo de Chao’s 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%
Fogo de Chao 7.40% 8.08% 4.58%

Summary

Fogo de Chao beats Red Robin Gourmet Burgers on 8 of the 14 factors compared between the two stocks.

About Red Robin Gourmet Burgers

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.

About Fogo de Chao

Fogo de Chao, Inc. is a United States-based holding company. The Company, through its subsidiaries, operates upscale Brazilian churrascaria steakhouses under the brand of Fogo de Chao. The Company owns 100% of Brasa (Purchaser) Inc. (Brasa Purchaser), which owns 100% of Brasa (Holdings) Inc. (Brasa Holdings). The Company operates through two segments: United States and Brazil. It specializes in fire-roasting meats utilizing the centuries-old Southern Brazilian cooking technique of churrasco. The Company offers its guests a tasting menu of meats featuring up to 20 cuts, simply seasoned and fire-roasted to expose their natural flavors. The Company operates approximately 26 restaurants in the United States, 10 in Brazil and one in Mexico. The Company operates a range of restaurant formats, including in-line and free-standing locations. Its restaurants range in size from approximately 7,000 to 16,000 square feet, with seating from 200 to 500 guests.

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