Analyzing First Watch Restaurant Group (NASDAQ:FWRG) and Rave Restaurant Group (NASDAQ:RAVE)

First Watch Restaurant Group (NASDAQ:FWRG) and Rave Restaurant Group (NASDAQ:RAVE) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Valuation & Earnings

This table compares First Watch Restaurant Group and Rave Restaurant Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Watch Restaurant Group	$1.22 billion	0.56	$19.43 million	$0.28	39.82
Rave Restaurant Group	$12.04 million	3.86	$2.70 million	$0.21	15.57

First Watch Restaurant Group has higher revenue and earnings than Rave Restaurant Group. Rave Restaurant Group is trading at a lower price-to-earnings ratio than First Watch Restaurant Group, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and price targets for First Watch Restaurant Group and Rave Restaurant Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Watch Restaurant Group	1	1	9	1	2.83
Rave Restaurant Group	0	1	0	0	2.00

First Watch Restaurant Group currently has a consensus price target of $19.27, suggesting a potential upside of 72.85%. Given First Watch Restaurant Group’s stronger consensus rating and higher possible upside, analysts plainly believe First Watch Restaurant Group is more favorable than Rave Restaurant Group.

Profitability

This table compares First Watch Restaurant Group and Rave Restaurant Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Watch Restaurant Group	1.38%	2.85%	1.02%
Rave Restaurant Group	23.19%	19.22%	16.81%

Risk and Volatility

First Watch Restaurant Group has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500. Comparatively, Rave Restaurant Group has a beta of 0.41, suggesting that its stock price is 59% less volatile than the S&P 500.

Insider & Institutional Ownership

96.1% of First Watch Restaurant Group shares are held by institutional investors. Comparatively, 15.1% of Rave Restaurant Group shares are held by institutional investors. 6.1% of First Watch Restaurant Group shares are held by company insiders. Comparatively, 28.0% of Rave Restaurant Group shares are held by company 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.

Summary

First Watch Restaurant Group beats Rave Restaurant Group on 10 of the 15 factors compared between the two stocks.

About First Watch Restaurant Group

First Watch Restaurant Group, Inc., through its subsidiaries, operates and franchises restaurants under the First Watch trade name in the United States. The company was formerly known as AI Fresh Super Holdco, Inc. and changed its name to First Watch Restaurant Group, Inc. in December 2019. First Watch Restaurant Group, Inc. was founded in 1983 and is based in Bradenton, Florida.

About Rave Restaurant Group

Rave Restaurant Group, Inc., together with its subsidiaries, engages in the operation and franchising of pizza buffet, delivery/carry-out (delco), and express restaurants under the Pizza Inn and Pie Five trademarks in the United States and internationally. The company operates through three segments: Pizza Inn Franchising, Pie Five Franchising, and Company-Owned Restaurants. Its buffet restaurants are located in free standing buildings or strip centers in retail developments that offer dine-in, carryout, and catering services, as well as delivery services. The company’s delco restaurants provide delivery and carryout services and are located in shopping centers or other in-line retail developments. Its Express restaurants serve customers through various non-traditional points of sale and are located in convenience stores, food courts, college campuses, airport terminals, travel plazas, athletic facilities, or other commercial facilities. The company’s Pizza Inn Express restaurants serve customers through a non-traditional, licensed, pizza-only model called Pizza Inn Express, located at production-oriented facilities. In addition, it operates and franchises fast casual restaurants under the Pie Five Pizza Company or Pie Five trademarks. The company was formerly known as Pizza Inn Holdings, Inc. and changed its name to Rave Restaurant Group, Inc. in January 2015. Rave Restaurant Group, Inc. was founded in 1958 and is based in The Colony, Texas.