Reviewing The Habit Restaurants (HABT) & Good Times Restaurants (GTIM)

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

Analyst Recommendations

This is a breakdown of recent recommendations for The Habit Restaurants and Good Times Restaurants, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Habit Restaurants 0 2 4 0 2.67
Good Times Restaurants 0 0 1 0 3.00

The Habit Restaurants currently has a consensus price target of $19.70, suggesting a potential upside of 53.91%. Good Times Restaurants has a consensus price target of $6.00, suggesting a potential upside of 103.39%. Given Good Times Restaurants’ stronger consensus rating and higher possible upside, analysts clearly believe Good Times Restaurants is more favorable than The Habit Restaurants.

Earnings & Valuation

This table compares The Habit Restaurants and Good Times Restaurants’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Habit Restaurants $307.71 million 0.85 $29.44 million $0.25 51.20
Good Times Restaurants $73.71 million 0.50 $2.12 million ($0.14) -21.07

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

Insider & Institutional Ownership

94.5% of The Habit Restaurants shares are owned by institutional investors. Comparatively, 32.7% of Good Times Restaurants shares are owned by institutional investors. 5.8% of The Habit Restaurants shares are owned by company insiders. Comparatively, 8.4% of Good Times Restaurants shares are owned 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.

Volatility and Risk

The Habit Restaurants has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500. Comparatively, Good Times Restaurants has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
The Habit Restaurants 1.64% 4.97% 2.16%
Good Times Restaurants -2.25% -4.44% -3.35%

Summary

The Habit Restaurants beats Good Times Restaurants on 10 of the 13 factors compared between the two stocks.

About The Habit Restaurants

The Habit Restaurants, Inc. (Habit Burger Grill) is a fast casual restaurant company. The Company is engaged in preparing made-to-order char-grilled burgers and sandwiches featuring tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame. In addition, it offers sides, shakes and malts. The Company prepares its burgers with char-grilled preparation, topped with caramelized onions, melted cheese, lettuce and tomatoes. It operates a range of restaurant formats, including end-cap, free-standing, inline, end-cap drive-thru and traditional stand-alone drive-in, primarily within suburban shopping centers and retail settings. As of December 27, 2016, the Company had 172 locations in 15 markets in 10 states and the United Arab Emirates, including franchised/licensed locations (excluding six licensed locations in Santa Barbara County, California).

About Good Times Restaurants

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.

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