Carrols Restaurant Group (NASDAQ: TAST) and Sonic Corp. (NASDAQ:SONC) 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 dividends, institutional ownership, valuation, profitability, earnings, risk and analyst recommendations.

Earnings and Valuation

This table compares Carrols Restaurant Group and Sonic Corp.’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Carrols Restaurant Group $999.03 million 0.41 $80.24 million $0.72 15.90
Sonic Corp. $477.27 million 2.19 $159.99 million $1.47 17.22

Sonic Corp. has higher revenue, but lower earnings than Carrols Restaurant Group. Carrols Restaurant Group is trading at a lower price-to-earnings ratio than Sonic Corp., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Carrols Restaurant Group and Sonic Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Carrols Restaurant Group 3.44% 6.33% 1.86%
Sonic Corp. 13.34% -33.92% 9.64%

Analyst Ratings

This is a summary of recent recommendations for Carrols Restaurant Group and Sonic Corp., as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Carrols Restaurant Group 0 0 2 0 3.00
Sonic Corp. 1 7 5 0 2.31

Carrols Restaurant Group presently has a consensus price target of $15.50, indicating a potential upside of 35.37%. Sonic Corp. has a consensus price target of $27.75, indicating a potential upside of 9.64%. Given Carrols Restaurant Group’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Carrols Restaurant Group is more favorable than Sonic Corp..

Institutional & Insider Ownership

86.8% of Carrols Restaurant Group shares are held by institutional investors. 5.6% of Carrols Restaurant Group shares are held by insiders. Comparatively, 6.2% of Sonic Corp. shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Sonic Corp. pays an annual dividend of $0.56 per share and has a dividend yield of 2.2%. Carrols Restaurant Group does not pay a dividend. Sonic Corp. pays out 38.1% of its earnings in the form of a dividend.

Volatility and Risk

Carrols Restaurant Group has a beta of 0.03, meaning that its share price is 97% less volatile than the S&P 500. Comparatively, Sonic Corp. has a beta of 1.76, meaning that its share price is 76% more volatile than the S&P 500.

Summary

Sonic Corp. beats Carrols Restaurant Group on 10 of the 16 factors compared between the two stocks.

About Carrols Restaurant Group

Carrols Restaurant Group, Inc. is a holding company and conducts all of its operations through its subsidiary, Carrols Corporation (Carrols) and Carrols’ subsidiary, Carrols LLC. The Company is a restaurant company and Burger King franchisee in the United States. As of January 1, 2017, the Company had owned and operated 753 Burger King restaurants under the name Burger King in 16 Northeastern, Midwestern and Southeastern states. Burger King restaurants feature the flame-broiled Whopper sandwich, as well as a range of hamburgers, chicken and other specialty sandwiches, French fries, salads, breakfast items, hot dogs, snacks, smoothies, frappes and other offerings. The Company’s Burger King restaurants are located in various states, such as Illinois, Indiana, Kentucky, Maine, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Vermont, Virginia and West Virginia.

About Sonic Corp.

Sonic Corp. operates and franchises the chain of drive-thru restaurants (Sonic Drive-Ins) in the United States. As of August 31, 2016, 3,557 Sonic Drive-Ins were in operation from coast to coast in 45 states, consisting of 345 Company drive-thrus and 3,212 franchise drive-thrus. As of August 31, 2016, its restaurant design and construction consisted of a kitchen housed in a one-story building, which was approximately 1,500 square feet, flanked by canopy-covered rows of 16 to 24 parking spaces, with each space having its own payment terminal, intercom speaker system and menu board. At a Sonic Drive-In, a customer drives into one of the parking spaces, orders through the intercom speaker system and has the food delivered by a carhop and Sonic Drive-Ins also include a drive-thru lane and patio seating to provide customers with alternative dining options. Its food items include specialty drinks, such as cherry limeades and slushes, ice cream desserts and chicken sandwiches and hamburgers.

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