Ruth’s Hospitality Group (NASDAQ: RUTH) and El Pollo LoCo (NASDAQ:LOCO) 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 earnings, profitability, valuation, institutional ownership, analyst recommendations, risk and dividends.
Ruth’s Hospitality Group pays an annual dividend of $0.44 per share and has a dividend yield of 1.6%. El Pollo LoCo does not pay a dividend. Ruth’s Hospitality Group pays out 40.0% of its earnings in the form of a dividend.
82.4% of Ruth’s Hospitality Group shares are held by institutional investors. Comparatively, 83.6% of El Pollo LoCo shares are held by institutional investors. 7.5% of Ruth’s Hospitality Group shares are held by company insiders. Comparatively, 46.0% of El Pollo LoCo shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Risk and Volatility
Ruth’s Hospitality Group has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500. Comparatively, El Pollo LoCo has a beta of 0.34, indicating that its share price is 66% less volatile than the S&P 500.
Valuation & Earnings
This table compares Ruth’s Hospitality Group and El Pollo LoCo’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Ruth’s Hospitality Group||$414.82 million||2.02||$30.13 million||$1.10||24.64|
|El Pollo LoCo||$401.70 million||1.04||$8.61 million||$0.63||17.14|
Ruth’s Hospitality Group has higher revenue and earnings than El Pollo LoCo. El Pollo LoCo is trading at a lower price-to-earnings ratio than Ruth’s Hospitality Group, indicating that it is currently the more affordable of the two stocks.
This table compares Ruth’s Hospitality Group and El Pollo LoCo’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ruth’s Hospitality Group||7.69%||44.01%||17.02%|
|El Pollo LoCo||1.54%||9.19%||5.62%|
This is a summary of current recommendations and price targets for Ruth’s Hospitality Group and El Pollo LoCo, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ruth’s Hospitality Group||0||3||1||0||2.25|
|El Pollo LoCo||0||3||1||0||2.25|
Ruth’s Hospitality Group currently has a consensus price target of $24.00, indicating a potential downside of 11.44%. El Pollo LoCo has a consensus price target of $12.25, indicating a potential upside of 13.43%. Given El Pollo LoCo’s higher probable upside, analysts clearly believe El Pollo LoCo is more favorable than Ruth’s Hospitality Group.
Ruth’s Hospitality Group beats El Pollo LoCo on 9 of the 14 factors compared between the two stocks.
About Ruth’s Hospitality Group
Ruth's Hospitality Group, Inc., together with its subsidiaries, develops, operates, and franchises fine dining restaurants under the Ruth's Chris Steak House name. Its restaurants offer food and beverage products to special occasion diners and frequent customers, as well as business clientele. As of December 31, 2017, the company had 155 Ruth's Chris Steak House restaurants, including 77 company-owned restaurants; 2 restaurant operating under a contractual agreement; and 76 franchisee-owned restaurants comprising 21 international franchisee-owned restaurants in Aruba, Canada, China, Hong Kong, Indonesia, Japan, Mexico, Panama, Singapore, Taiwan, and the United Arab Emirates. Ruth's Hospitality Group, Inc. was founded in 1965 and is headquartered in Winter Park, Florida.
About El Pollo LoCo
El Pollo Loco Holdings, Inc., through its subsidiary El Pollo Loco, Inc., develops, franchises, licenses, and operates quick-service restaurants under the El Pollo Loco name. The company specializes in offering flame-grilled chicken. As of March 8, 2018, it had approximately 475 company-owned and franchised restaurants in Arizona, California, Nevada, Texas, and Utah. The company was formerly known as Chicken Acquisition Corp. and changed its name to El Pollo Loco Holdings, Inc. in April 2014. El Pollo Loco Holdings, Inc. was founded in 1980 and is headquartered in Costa Mesa, California.
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