Critical Review: Good Times Restaurants (GTIM) versus One Group Hospitality (STKS)

Good Times Restaurants (NASDAQ: GTIM) and One Group Hospitality (NASDAQ:STKS) are both small-cap cyclical consumer goods & services companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, valuation and institutional ownership.

Valuation & Earnings

This table compares Good Times Restaurants and One Group Hospitality’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Good Times Restaurants $79.08 million 0.40 -$2.25 million ($0.18) -14.17
One Group Hospitality $72.41 million 0.80 -$16.68 million ($0.79) -2.91

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

Insider & Institutional Ownership

32.3% of Good Times Restaurants shares are held by institutional investors. Comparatively, 14.5% of One Group Hospitality shares are held by institutional investors. 8.4% of Good Times Restaurants shares are held by insiders. Comparatively, 35.9% of One Group Hospitality shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Good Times Restaurants and One Group Hospitality’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Good Times Restaurants -2.59% -5.92% -4.17%
One Group Hospitality -25.48% -68.30% -7.44%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Good Times Restaurants and One Group Hospitality, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Good Times Restaurants 0 0 1 0 3.00
One Group Hospitality 0 0 0 0 N/A

Good Times Restaurants presently has a consensus price target of $6.00, suggesting a potential upside of 135.29%. Given Good Times Restaurants’ higher possible upside, equities analysts plainly believe Good Times Restaurants is more favorable than One Group Hospitality.

Volatility and Risk

Good Times Restaurants has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500. Comparatively, One Group Hospitality has a beta of 1.55, indicating that its share price is 55% more volatile than the S&P 500.

Summary

Good Times Restaurants beats One Group Hospitality on 9 of the 13 factors compared between the two stocks.

Good Times Restaurants Company Profile

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.

One Group Hospitality Company Profile

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.

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