Contrasting Biglari Holdings (NYSE:BH) and Zoe’s Kitchen (ZOES)

Biglari Holdings (NYSE: BH) and Zoe’s Kitchen (NYSE:ZOES) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, valuation, risk and analyst recommendations.

Analyst Ratings

This is a summary of recent ratings and price targets for Biglari Holdings and Zoe’s Kitchen, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Biglari Holdings 0 1 0 0 2.00
Zoe’s Kitchen 1 6 3 0 2.20

Zoe’s Kitchen has a consensus target price of $17.15, indicating a potential upside of 29.14%. Given Zoe’s Kitchen’s stronger consensus rating and higher probable upside, analysts clearly believe Zoe’s Kitchen is more favorable than Biglari Holdings.

Volatility & Risk

Biglari Holdings has a beta of 0.32, meaning that its share price is 68% less volatile than the S&P 500. Comparatively, Zoe’s Kitchen has a beta of 0.37, meaning that its share price is 63% less volatile than the S&P 500.

Earnings and Valuation

This table compares Biglari Holdings and Zoe’s Kitchen’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Biglari Holdings $839.07 million 0.75 $43.14 million $12.92 23.57
Zoe’s Kitchen $286.11 million 0.90 $22.79 million $0.01 1,328.00

Biglari Holdings has higher revenue and earnings than Zoe’s Kitchen. Biglari Holdings is trading at a lower price-to-earnings ratio than Zoe’s Kitchen, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Biglari Holdings and Zoe’s Kitchen’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Biglari Holdings 1.92% 3.15% 1.52%
Zoe’s Kitchen 0.15% 0.62% 0.37%

Institutional and Insider Ownership

91.1% of Biglari Holdings shares are held by institutional investors. 51.2% of Biglari Holdings shares are held by insiders. Comparatively, 3.0% of Zoe’s Kitchen shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Biglari Holdings beats Zoe’s Kitchen on 8 of the 14 factors compared between the two stocks.

About Biglari Holdings

Biglari Holdings Inc. is a holding company owning subsidiaries engaged in various business activities, including media, property and casualty insurance, and restaurants The Company’s segments include Restaurant Operations, First Guard, Maxim, Other and Corporate. The Company’s restaurant operations’ activities are conducted through approximately two restaurant concepts operated by subsidiaries Steak n Shake Inc. (Steak n Shake) and Western Sizzlin Corporation (Western). Steak n Shake is engaged in the ownership, operation and franchising of Steak n Shake restaurants. Western is engaged primarily in the franchising of restaurants. The Company’s insurance business consists of First Guard Insurance Company and its agency, 1st Guard Corporation. First Guard is a direct underwriter of commercial trucking insurance, selling physical damage and non-trucking liability insurance to truckers. Its media business consists of Maxim. Maxim’s business lies principally in media and licensing.

About Zoe’s Kitchen

Zoe’s Kitchen, Inc. develops and operates fast-casual restaurants serving a menu of fresh, wholesome, Mediterranean-inspired dishes delivered with Southern hospitality. The Company’s menu offers meals made from scratch using produce, proteins and other ingredients, including its appetizers, soups, salads and kabobs. Its food, including both hot and cold items, is suited for catering to a range of business and social occasions. It caters to a range of dietary needs by offering vegetarian, vegan, gluten-free and its calorie conscious, Simply 500 menu selections. Its party packs serve groups of approximately 10 and are each filled with their own combination of fresh fruits, veggies, proteins and grains. The Company serves dishes for various occasions, such as Guilt-Free Girls Night, Game Day Goodies, Shower Sensations and Kids’ Party Pack. As of December 26, 2016, it had operated 201 Company-owned restaurants and three franchise restaurants in 20 states across the United States.

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