Luby’s (NYSE: LUB) and Zoe’s Kitchen (NYSE:ZOES) are both small-cap retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.

Earnings & Valuation

This table compares Luby’s and Zoe’s Kitchen’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Luby’s $387.17 million 0.19 $13.97 million ($0.92) -2.80
Zoe’s Kitchen $294.14 million 0.79 $22.57 million ($0.02) -593.50

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

Volatility & Risk

Luby’s has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, Zoe’s Kitchen has a beta of 0.34, indicating that its share price is 66% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Luby’s -6.96% -4.97% -3.16%
Zoe’s Kitchen -0.07% -0.27% -0.16%

Institutional and Insider Ownership

42.9% of Luby’s shares are held by institutional investors. 35.2% of Luby’s shares are held by company insiders. Comparatively, 3.0% of Zoe’s Kitchen shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Luby’s and Zoe’s Kitchen, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Luby’s 0 0 0 0 N/A
Zoe’s Kitchen 1 6 3 0 2.20

Zoe’s Kitchen has a consensus target price of $17.55, indicating a potential upside of 47.85%. Given Zoe’s Kitchen’s higher probable upside, analysts plainly believe Zoe’s Kitchen is more favorable than Luby’s.

Summary

Zoe’s Kitchen beats Luby’s on 8 of the 12 factors compared between the two stocks.

About Luby’s

Luby’s, Inc., is a multi-branded company operating in the restaurant industry and in the contract food services industry. The Company is managed through three segments: Company-owned restaurants, franchise operations, and Culinary Contract Services (CSS). The company-owned restaurants brands are Luby’s Cafeteria, Fuddruckers, and Cheeseburger in Paradise with a couple of non-core restaurant locations under other brand names. As of August 31, 2016, the Company owned and operated 175 restaurants, with 127 in Texas and the remainder in other states. The Company offers franchises for the Fuddruckers brand. As of August 31, 2016, the number of franchised restaurants were 113. Culinary Contract Services consists of contract arrangements to manage food services for clients operating in three lines of business: healthcare, higher education, and corporate dining. As of August 31, 2016, the Company had 24 Culinary Contract Services contracts.

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.

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