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

Insider and Institutional Ownership

72.8% of Potbelly Corporation shares are held by institutional investors. 7.0% of Bloomin’ Brands 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 endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

Bloomin’ Brands has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500. Comparatively, Potbelly Corporation has a beta of 0.91, meaning that its stock price is 9% less volatile than the S&P 500.

Earnings & Valuation

This table compares Bloomin’ Brands and Potbelly Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Bloomin’ Brands $4.19 billion 0.41 $402.41 million $0.90 19.51
Potbelly Corporation $415.98 million 0.75 $39.72 million $0.17 73.24

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

Analyst Recommendations

This is a breakdown of current recommendations for Bloomin’ Brands and Potbelly Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bloomin’ Brands 1 7 1 0 2.00
Potbelly Corporation 0 3 1 0 2.25

Bloomin’ Brands currently has a consensus price target of $20.63, suggesting a potential upside of 17.45%. Potbelly Corporation has a consensus price target of $13.67, suggesting a potential upside of 9.77%. Given Bloomin’ Brands’ higher probable upside, analysts plainly believe Bloomin’ Brands is more favorable than Potbelly Corporation.

Dividends

Bloomin’ Brands pays an annual dividend of $0.32 per share and has a dividend yield of 1.8%. Potbelly Corporation does not pay a dividend. Bloomin’ Brands pays out 35.6% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Bloomin’ Brands 2.29% 74.68% 5.48%
Potbelly Corporation 1.03% 8.68% 6.15%

Summary

Potbelly Corporation beats Bloomin’ Brands on 8 of the 15 factors compared between the two stocks.

About Bloomin’ Brands

Bloomin’ Brands, Inc. is a holding company. The Company owns and operates casual, upscale casual and fine dining restaurants. The Company operates through two segments: U.S. and International. The U.S. segment includes all brands operating in the United States. The International segment includes brands operating outside the United States. As of December 25, 2016, the Company had a portfolio of four restaurant concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, and Fleming’s Prime Steakhouse & Wine Bar. OSI Restaurant Partners, LLC (OSI) is the Company’s primary operating entity. New Private Restaurant Properties, LLC (PRP), an indirect subsidiary of the Company, leases the Company-owned restaurant properties to OSI’s subsidiaries. As of December 25, 2016, the Company owned and operated 1,276 restaurants and franchised 240 restaurants across 48 states, Puerto Rico, Guam and 20 countries.

About Potbelly Corporation

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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