Reviewing One Group Hospitality (STKS) and Denny's (DENN)

One Group Hospitality (NASDAQ: STKS) and Denny's (NASDAQ:DENN) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, analyst recommendations, risk, valuation, dividends and institutional ownership.

Earnings & Valuation

This table compares One Group Hospitality and Denny's’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
One Group Hospitality $72.41 million 0.80 -$16.68 million ($0.80) -2.88
Denny's $506.95 million 1.88 $19.40 million $0.52 28.12

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

Insider & Institutional Ownership

14.5% of One Group Hospitality shares are owned by institutional investors. Comparatively, 91.0% of Denny's shares are owned by institutional investors. 35.9% of One Group Hospitality shares are owned by company insiders. Comparatively, 5.2% of Denny's shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

One Group Hospitality has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, Denny's has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500.

Profitability

This table compares One Group Hospitality and Denny's’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
One Group Hospitality -25.48% -68.30% -7.44%
Denny's 7.21% -52.30% 13.31%

Analyst Recommendations

This is a breakdown of recent recommendations for One Group Hospitality and Denny's, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
One Group Hospitality 0 0 0 0 N/A
Denny's 0 2 1 0 2.33

Denny's has a consensus target price of $12.67, indicating a potential downside of 13.36%. Given Denny's’ higher probable upside, analysts clearly believe Denny's is more favorable than One Group Hospitality.

Summary

Denny's beats One Group Hospitality on 10 of the 12 factors compared between the two stocks.

About One Group Hospitality

The ONE Group Hospitality, Inc., formerly Committed Capital Acquisition Corporation, is a hospitality company. The Company develops, owns and operates restaurants and lounges, and provides food and beverage services for hospitality venues, including hotels, casinos and other locations across the globe. It operates through three segments: owned STK units (STKs), F&B hospitality management agreements (F&B), and Other concepts (Other). Its STKs segment consists of leased restaurant locations. Its F&B segment consists of management agreements, in which the Company operates the food and beverage services in hotels or casinos and could include an STK. Its Other segment includes owned non-STK leased locations. Its restaurant brand is STK, a multi-unit steakhouse concept with locations in metropolitan cities around the globe. Its F&B hospitality management services include developing, managing and operating restaurants, bars, rooftop lounges, pools, banqueting and catering facilities.

About Denny's

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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