Zoe's Kitchen (NYSE: ZOES) and DineEquity (NYSE:DIN) are both small-cap cyclical consumer goods & services companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, profitability, risk, analyst recommendations, valuation, earnings and institutional ownership.

Earnings and Valuation

This table compares Zoe's Kitchen and DineEquity’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Zoe's Kitchen $294.14 million 0.82 $22.57 million ($0.02) -619.50
DineEquity $621.56 million 1.25 $234.57 million $4.48 9.67

DineEquity has higher revenue and earnings than Zoe's Kitchen. Zoe's Kitchen is trading at a lower price-to-earnings ratio than DineEquity, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

92.0% of DineEquity shares are owned by institutional investors. 3.0% of Zoe's Kitchen shares are owned by insiders. Comparatively, 2.2% of DineEquity shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Zoe's Kitchen has a beta of 0.34, indicating that its share price is 66% less volatile than the S&P 500. Comparatively, DineEquity has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500.

Profitability

This table compares Zoe's Kitchen and DineEquity’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zoe's Kitchen 0.78% 1.91% 1.08%
DineEquity 13.02% 38.34% 4.35%

Analyst Ratings

This is a breakdown of current ratings for Zoe's Kitchen and DineEquity, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zoe's Kitchen 1 6 3 0 2.20
DineEquity 0 4 3 0 2.43

Zoe's Kitchen currently has a consensus price target of $17.55, suggesting a potential upside of 41.65%. DineEquity has a consensus price target of $57.00, suggesting a potential upside of 31.64%. Given Zoe's Kitchen’s higher probable upside, analysts plainly believe Zoe's Kitchen is more favorable than DineEquity.

Dividends

DineEquity pays an annual dividend of $3.88 per share and has a dividend yield of 9.0%. Zoe's Kitchen does not pay a dividend. DineEquity pays out 86.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DineEquity has increased its dividend for 2 consecutive years.

Summary

DineEquity beats Zoe's Kitchen on 12 of the 15 factors compared between the two stocks.

About Zoe's Kitchen

Zoe’s Kitchen, Inc. develops and operates fast-casual restaurants serving a menu of fresh, wholesome, Mediterranean-inspired dishes delivered with Southern hospitality. The Company’s menu offers meals made from scratch using produce, proteins and other ingredients, including its appetizers, soups, salads and kabobs. Its food, including both hot and cold items, is suited for catering to a range of business and social occasions. It caters to a range of dietary needs by offering vegetarian, vegan, gluten-free and its calorie conscious, Simply 500 menu selections. Its party packs serve groups of approximately 10 and are each filled with their own combination of fresh fruits, veggies, proteins and grains. The Company serves dishes for various occasions, such as Guilt-Free Girls Night, Game Day Goodies, Shower Sensations and Kids’ Party Pack. As of December 26, 2016, it had operated 201 Company-owned restaurants and three franchise restaurants in 20 states across the United States.

About DineEquity

DineEquity, Inc., through its subsidiaries, owns and franchises the Applebee’s Neighborhood Grill & Bar (Applebee’s) concept in the bar and grill segment within the casual dining category of the restaurant industry, and owns, franchises and operates the International House of Pancakes (IHOP) concept in the family dining category of the restaurant industry. It operates through four segments: Franchise operations, Rental operations, Company restaurant operations and Financing operations. As of December 31, 2016, it had 3,749 restaurants. Applebee’s menu features a selection of grill and bar fare, such as appetizers, bar snacks, burgers, classic entrees and lighter fare, as well as cocktails, beers and desserts. As of December 31, 2016, IHOP franchise and area license restaurants were located in all 50 states within the United States, in the District of Columbia, in three United States territories and in 10 countries outside of the United States.

Receive News & Ratings for Zoe's Kitchen Inc Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Zoe's Kitchen Inc and related companies with MarketBeat.com's FREE daily email newsletter.