Analyzing Habit Restaurants (HABT) and Meritage Hospitality Group (MHGU)

Habit Restaurants (NASDAQ:HABT) and Meritage Hospitality Group (OTCMKTS:MHGU) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Risk & Volatility

Habit Restaurants has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, Meritage Hospitality Group has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500.

Profitability

This table compares Habit Restaurants and Meritage Hospitality Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Habit Restaurants -1.06% 2.54% 1.23%
Meritage Hospitality Group N/A N/A N/A

Institutional & Insider Ownership

59.6% of Habit Restaurants shares are owned by institutional investors. 16.0% of Habit Restaurants shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Habit Restaurants and Meritage Hospitality Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Habit Restaurants 0 3 3 0 2.50
Meritage Hospitality Group 0 0 0 0 N/A

Habit Restaurants presently has a consensus price target of $15.14, suggesting a potential upside of 1.97%. Given Habit Restaurants’ higher possible upside, equities research analysts clearly believe Habit Restaurants is more favorable than Meritage Hospitality Group.

Earnings and Valuation

This table compares Habit Restaurants and Meritage Hospitality Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Habit Restaurants $331.70 million 1.17 -$2.80 million $0.16 92.81
Meritage Hospitality Group $235.77 million 0.48 $6.44 million N/A N/A

Meritage Hospitality Group has lower revenue, but higher earnings than Habit Restaurants.

Summary

Habit Restaurants beats Meritage Hospitality Group on 9 of the 11 factors compared between the two stocks.

About Habit Restaurants

The Habit Restaurants, Inc., a holding company, operates and franchises fast casual restaurants under The Habit Burger Grill name. It specializes in offering made-to-order char-grilled burgers and sandwiches featuring choice tri-tip steak, grilled chicken, and sushi-grade tuna cooked over an open flame; and salads, as well as sides, shakes, and malts. As of June 26, 2018, the company had 235 restaurants in California, Arizona, Utah, New Jersey, Florida, Idaho, Virginia, Nevada, Washington, Maryland, and Pennsylvania, as well as 4 international locations. The Habit Restaurants, Inc. was founded in 1969 and is headquartered in Irvine, California.

About Meritage Hospitality Group

Meritage Hospitality Group Inc. operates quick-service and casual dining restaurants. The company operates restaurants under the Wendy's, Twisted Rooster, Crooked Goose, Freighters Eatery & Taproom, and Wheelhouse Kitchen & Cocktails brand names. As of December 31, 2017, it operated 249 restaurants in Arkansas, Connecticut, Florida, Georgia, Massachusetts, Michigan, Missouri, Mississippi, North Carolina, South Carolina, Ohio, Oklahoma, Tennessee, Texas, and Virginia. The company was formerly known as Thomas Edison Inns, Inc. and changed its name to Meritage Hospitality Group Inc. in May 1996. Meritage Hospitality Group Inc. was incorporated in 1986 and is headquartered in Grand Rapids, Michigan.

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