Bob Evans Farms (NASDAQ: BOBE) and Ruth’s Hospitality Group (NASDAQ:RUTH) are both small-cap retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, profitability, institutional ownership, valuation, earnings and analyst recommendations.
This table compares Bob Evans Farms and Ruth’s Hospitality Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Bob Evans Farms||15.15%||19.58%||6.82%|
|Ruth’s Hospitality Group||7.97%||37.86%||15.69%|
Valuation & Earnings
This table compares Bob Evans Farms and Ruth’s Hospitality Group’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Bob Evans Farms||$394.84 million||3.38||$71.50 million||$6.27||10.69|
|Ruth’s Hospitality Group||$396.96 million||1.52||$62.65 million||$1.01||19.60|
Bob Evans Farms has higher revenue, but lower earnings than Ruth’s Hospitality Group. Bob Evans Farms is trading at a lower price-to-earnings ratio than Ruth’s Hospitality Group, indicating that it is currently the more affordable of the two stocks.
Bob Evans Farms pays an annual dividend of $1.36 per share and has a dividend yield of 2.0%. Ruth’s Hospitality Group pays an annual dividend of $0.36 per share and has a dividend yield of 1.8%. Bob Evans Farms pays out 21.7% of its earnings in the form of a dividend. Ruth’s Hospitality Group pays out 35.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Bob Evans Farms has increased its dividend for 9 consecutive years. Bob Evans Farms is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider & Institutional Ownership
78.3% of Bob Evans Farms shares are owned by institutional investors. Comparatively, 84.2% of Ruth’s Hospitality Group shares are owned by institutional investors. 1.2% of Bob Evans Farms shares are owned by insiders. Comparatively, 6.7% of Ruth’s Hospitality Group shares are owned by 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 breakdown of recent ratings for Bob Evans Farms and Ruth’s Hospitality Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Bob Evans Farms||0||3||3||0||2.50|
|Ruth’s Hospitality Group||0||3||1||0||2.25|
Bob Evans Farms currently has a consensus target price of $75.68, indicating a potential upside of 12.96%. Ruth’s Hospitality Group has a consensus target price of $20.75, indicating a potential upside of 4.80%. Given Bob Evans Farms’ stronger consensus rating and higher possible upside, analysts clearly believe Bob Evans Farms is more favorable than Ruth’s Hospitality Group.
Volatility and Risk
Bob Evans Farms has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500. Comparatively, Ruth’s Hospitality Group has a beta of 0.29, meaning that its share price is 71% less volatile than the S&P 500.
Bob Evans Farms beats Ruth’s Hospitality Group on 12 of the 17 factors compared between the two stocks.
Bob Evans Farms Company Profile
Bob Evans Farms, Inc. (Bob Evans) is a producer and distributor of refrigerated potato, pasta and vegetable-based side dishes, pork sausage, and a variety of refrigerated and frozen food items under the Bob Evans and Owens or Country Creek brand names. The Company’s food products are distributed to customers throughout the United States. Additionally, the Company manufactures and sells similar products to foodservice customers, restaurants and food sellers. The Company operates through BEF Foods segment. The BEF Foods segment offers a range of wholesome food products to retail and foodservice customers. The Company produces food products in its four manufacturing facilities. It produces sausage products at its plants located in Hillsdale, Michigan, and Xenia, Ohio.
Ruth’s Hospitality Group Company Profile
Ruth’s Hospitality Group, Inc. develops and operates fine dining restaurants under the name, Ruth’s Chris Steak House. The Company operates through two segments. As of December 25, 2016, the Company-owned steakhouse restaurant segment included 68 Ruth’s Chris Steak House restaurants and one Ruth’s Chris Steak House restaurant, and the franchise operations segment included 81 franchisee-owned Ruth’s Chris Steak House restaurants. Its restaurant’s menu features a selection of Prime and Choice grade steaks, and other offerings. Its menu also includes lamb chops, fish, shrimp, crab, chicken and lobster. Its Ruth’s Chris restaurants offer 10 to 13 appetizer items, including Orleans-style barbequed shrimp, mushrooms stuffed with crabmeat, lobster bisque and osso bucco ravioli. It also offers a range of potatoes and vegetables as side dishes. For dessert, creme brulee, white chocolate bread pudding, cheesecake, fresh seasonal berries with sweet cream sauce and other selections are available.
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