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

Dividends

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

Risk & Volatility

Zoe’s Kitchen has a beta of 0.34, suggesting that its stock price is 66% less volatile than the S&P 500. Comparatively, Bloomin’ Brands has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500.

Institutional and Insider Ownership

99.9% of Bloomin’ Brands shares are held by institutional investors. 3.0% of Zoe’s Kitchen shares are held by company insiders. Comparatively, 7.0% of Bloomin’ Brands 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.

Earnings and Valuation

This table compares Zoe’s Kitchen and Bloomin’ Brands’ 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 0.80 $22.57 million ($0.02) -603.50
Bloomin’ Brands $4.19 billion 0.42 $402.41 million $0.90 19.96

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

Analyst Recommendations

This is a summary of recent ratings for Zoe’s Kitchen and Bloomin’ Brands, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zoe’s Kitchen 1 6 3 0 2.20
Bloomin’ Brands 1 7 1 0 2.00

Zoe’s Kitchen currently has a consensus price target of $17.55, indicating a potential upside of 45.40%. Bloomin’ Brands has a consensus price target of $20.63, indicating a potential upside of 14.84%. Given Zoe’s Kitchen’s stronger consensus rating and higher possible upside, analysts clearly believe Zoe’s Kitchen is more favorable than Bloomin’ Brands.

Profitability

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

Net Margins Return on Equity Return on Assets
Zoe’s Kitchen -0.07% -0.27% -0.16%
Bloomin’ Brands 2.29% 74.68% 5.48%

Summary

Bloomin’ Brands beats Zoe’s Kitchen on 10 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 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.

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