Analyzing GEN Restaurant Group (NASDAQ:GENK) & Potbelly (NASDAQ:PBPB)

Potbelly (NASDAQ:PBPB) and GEN Restaurant Group (NASDAQ:GENK) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, dividends, institutional ownership, analyst recommendations and earnings.

Insider & Institutional Ownership

72.6% of Potbelly shares are owned by institutional investors. Comparatively, 10.2% of GEN Restaurant Group shares are owned by institutional investors. 10.2% of Potbelly shares are owned by company insiders. Comparatively, 59.1% of GEN Restaurant Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and price targets for Potbelly and GEN Restaurant Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Potbelly	0	1	2	0	2.67
GEN Restaurant Group	0	0	2	0	3.00

Potbelly presently has a consensus target price of $16.00, suggesting a potential upside of 46.79%. GEN Restaurant Group has a consensus target price of $10.00, suggesting a potential upside of 135.85%. Given GEN Restaurant Group’s stronger consensus rating and higher possible upside, analysts clearly believe GEN Restaurant Group is more favorable than Potbelly.

Valuation and Earnings

This table compares Potbelly and GEN Restaurant Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Potbelly	$465.13 million	0.71	$5.12 million	$1.40	7.79
GEN Restaurant Group	$214.96 million	0.65	$8.41 million	($0.03)	-141.33

GEN Restaurant Group has lower revenue, but higher earnings than Potbelly. GEN Restaurant Group is trading at a lower price-to-earnings ratio than Potbelly, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Potbelly and GEN Restaurant Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Potbelly	8.14%	18.69%	2.41%
GEN Restaurant Group	0.39%	1.83%	0.37%

Volatility and Risk

Potbelly has a beta of 1.68, indicating that its stock price is 68% more volatile than the S&P 500. Comparatively, GEN Restaurant Group has a beta of 1.24, indicating that its stock price is 24% more volatile than the S&P 500.

Summary

Potbelly beats GEN Restaurant Group on 8 of the 13 factors compared between the two stocks.

About Potbelly

Potbelly Corporation, through its subsidiaries, owns, operates, and franchises Potbelly sandwich shops in the United States. The company was formerly known as Potbelly Sandwich Works, Inc. and changed its name to Potbelly Corporation in 2002. Potbelly Corporation was founded in 1977 and is headquartered in Chicago, Illinois.

About GEN Restaurant Group

GEN Restaurant Group, Inc. operates restaurants in California, Arizona, Hawaii, Nevada, Texas, New York, and Florida. It offers meats, poultry, and seafood. The company was founded in 2011 and is based in Cerritos, California.