Luby's (LUB) and Biglari (BH) Financial Analysis

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

Insider & Institutional Ownership

41.2% of Luby's shares are held by institutional investors. Comparatively, 87.9% of Biglari shares are held by institutional investors. 35.2% of Luby's shares are held by insiders. Comparatively, 51.2% of Biglari shares are held by 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.

Profitability

This table compares Luby's and Biglari’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Luby's -6.19% -6.47% -4.08%
Biglari 6.16% 9.84% 4.84%

Valuation and Earnings

This table compares Luby's and Biglari’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Luby's $376.03 million 0.22 -$23.26 million ($0.79) -3.53
Biglari $850.08 million 1.00 $99.45 million $42.31 9.73

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Luby's and Biglari, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Luby's 0 0 0 0 N/A
Biglari 0 1 0 0 2.00

Risk and Volatility

Luby's has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, Biglari has a beta of 0.37, meaning that its share price is 63% less volatile than the S&P 500.

Summary

Biglari beats Luby's on 10 of the 11 factors compared between the two stocks.

Luby's Company Profile

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.

Biglari Company Profile

Biglari Holdings Inc. is a holding company owning subsidiaries engaged in various business activities, including media, property and casualty insurance, and restaurants The Company’s segments include Restaurant Operations, First Guard, Maxim, Other and Corporate. The Company’s restaurant operations’ activities are conducted through approximately two restaurant concepts operated by subsidiaries Steak n Shake Inc. (Steak n Shake) and Western Sizzlin Corporation (Western). Steak n Shake is engaged in the ownership, operation and franchising of Steak n Shake restaurants. Western is engaged primarily in the franchising of restaurants. The Company’s insurance business consists of First Guard Insurance Company and its agency, 1st Guard Corporation. First Guard is a direct underwriter of commercial trucking insurance, selling physical damage and non-trucking liability insurance to truckers. Its media business consists of Maxim. Maxim’s business lies principally in media and licensing.

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