Good Times Restaurants (NASDAQ: GTIM) and Denny’s (NASDAQ:DENN) are both small-cap retail/wholesale companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, dividends, analyst recommendations and valuation.

Profitability

This table compares Good Times Restaurants and Denny’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Good Times Restaurants -2.25% -4.44% -3.35%
Denny’s 7.21% -52.30% 13.31%

Valuation and Earnings

This table compares Good Times Restaurants and Denny’s’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Good Times Restaurants $64.44 million 0.47 -$1.32 million ($0.14) -17.57
Denny’s $506.95 million 1.75 $19.40 million $0.52 26.14

Denny’s has higher revenue and earnings than Good Times Restaurants. Good Times Restaurants is trading at a lower price-to-earnings ratio than Denny’s, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

32.4% of Good Times Restaurants shares are held by institutional investors. Comparatively, 91.5% of Denny’s shares are held by institutional investors. 8.4% of Good Times Restaurants shares are held by company insiders. Comparatively, 5.2% of Denny’s 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 Recommendations

This is a breakdown of current ratings and recommmendations for Good Times Restaurants and Denny’s, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Good Times Restaurants 0 0 1 0 3.00
Denny’s 0 2 1 0 2.33

Good Times Restaurants currently has a consensus price target of $6.00, suggesting a potential upside of 143.90%. Denny’s has a consensus price target of $12.67, suggesting a potential downside of 6.79%. Given Good Times Restaurants’ stronger consensus rating and higher probable upside, research analysts plainly believe Good Times Restaurants is more favorable than Denny’s.

Risk & Volatility

Good Times Restaurants has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500. Comparatively, Denny’s has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500.

Summary

Denny’s beats Good Times Restaurants on 7 of the 12 factors compared between the two stocks.

Good Times Restaurants Company Profile

Good Times Restaurants Inc. operates and franchises Good Times Burgers & Frozen Custard (Good Times) restaurants and Bad Daddy’s Burger Bar concept (Bad Daddy’s). The Company operates through two segments: Good Times Burgers and Frozen Custard restaurants, and Bad Daddy’s Burger Bar restaurants. Good Times is a quick service restaurant concept. The menu of a Good Times restaurant includes hamburgers, cheeseburgers, chicken sandwiches, French fries, onion rings, soft drinks and frozen custard products. Its breakfast menu includes breakfast burritos, orange juice and coffee. Bad Daddy’s operates in the burger casual dining sector and is chef driven, full service, full bar concept. Its menu consists of burgers, salads, sandwiches and appetizers. Its bar focuses on local, craft microbrew beers and specialty cocktails. The Company operates through its subsidiaries, Good Times Drive Thru, Inc., BD of Colorado, LLC, Bad Daddy’s Franchise Development, LLC and Bad Daddy’s International, LLC.

Denny’s Company Profile

Denny’s Corporation (Denny’s) operates a franchised full-service restaurant chain. The Company, through its subsidiary, Denny’s, Inc., owns and operates the Denny’s brand. As of December 28, 2016, the Denny’s brand consisted of 1,733 franchised, licensed and Company-operated restaurants around the world, including 1,610 restaurants in the United States and 123 international locations. As of December 28, 2016, 1,564 of its restaurants were franchised or licensed and 169 were Company-operated. In addition to its breakfast-all-day items, Denny’s offers a selection of lunch and dinner items, including burgers, sandwiches, salads and skillet entrees, along with an assortment of beverages, appetizers and desserts. The Company’s Fit Fare menu helps its guests identify items suited to their dietary needs. Most Denny’s restaurants offer special items for children and seniors. The Company has restaurant locations within travel centers, primarily with Pilot and Pilot Flying J Travel Centers.

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