Chuy's (NASDAQ: CHUY) and Diversified Restaurant (NASDAQ:SAUC) are both small-cap retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.
Insider and Institutional Ownership
95.6% of Chuy's shares are held by institutional investors. Comparatively, 10.5% of Diversified Restaurant shares are held by institutional investors. 3.3% of Chuy's shares are held by company insiders. Comparatively, 48.2% of Diversified Restaurant shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This is a summary of recent recommendations and price targets for Chuy's and Diversified Restaurant, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Chuy's presently has a consensus price target of $26.89, indicating a potential upside of 3.42%. Diversified Restaurant has a consensus price target of $3.50, indicating a potential upside of 159.26%. Given Diversified Restaurant’s stronger consensus rating and higher probable upside, analysts clearly believe Diversified Restaurant is more favorable than Chuy's.
Risk & Volatility
Chuy's has a beta of -0.28, suggesting that its stock price is 128% less volatile than the S&P 500. Comparatively, Diversified Restaurant has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.
This table compares Chuy's and Diversified Restaurant’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings & Valuation
This table compares Chuy's and Diversified Restaurant’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Chuy's||$369.59 million||1.19||$28.95 million||$1.70||15.29|
|Diversified Restaurant||$165.46 million||0.22||-$6.00 million||($0.77)||-1.75|
Chuy's has higher revenue and earnings than Diversified Restaurant. Diversified Restaurant is trading at a lower price-to-earnings ratio than Chuy's, indicating that it is currently the more affordable of the two stocks.
Chuy's beats Diversified Restaurant on 9 of the 13 factors compared between the two stocks.
Chuy’s Holdings, Inc. operates Chuy’s, a restaurant concept offering a distinct menu of authentic, freshly prepared Mexican and Tex-Mex inspired food. As of December 25, 2016, the Company operated 80 Chuy’s restaurants across 16 states. The Company offers the same menu during lunch and dinner, which includes enchiladas, fajitas, tacos, burritos, combination platters and daily specials, complemented by a range of appetizers, soups and salads. Each of the Company’s restaurants offers a range of homemade sauces, including the signature Hatch green chile and creamy jalapeno sauces. The Company also offers a full-service bar in all of its restaurants providing its customers a range of beverage offerings, featuring a selection of specialty cocktails including its signature on-the-rocks margaritas made with fresh, hand-squeezed lime juice, and the Texas Martini, a made-to-order, hand-shaken cocktail served with jalapeno-stuffed olives.
About Diversified Restaurant
Diversified Restaurant Holdings, Inc. (DRH) is a restaurant company. The Company is a franchisee of Buffalo Wild Wings (BWW).As of September 25, 2016, the Company operated 64 BWW restaurants, which are located in Michigan, Florida, Missouri, Illinois and Indiana. The BWW restaurants feature a range of menu items with a multimedia social environment, a bar and an open layout designed to create a dining experience for sports fans and families. Its guests have the option of watching various sporting events on projection screens or televisions. As of September 25, 2016, the BWW menu specialized in 21 sauces and seasonings with flavors ranging from Sweet BBQ to Blazin’. As of September 25, 2016, the restaurants offered 12 to 30 domestic and imported beers on tap, including several local or regional microbrews and a selection of bottled beer, wine and liquor.
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