Critical Review: One Group Hospitality (STKS) vs. Good Times Restaurants (GTIM)

One Group Hospitality (NASDAQ: STKS) and Good Times Restaurants (NASDAQ:GTIM) are both small-cap retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, risk, analyst recommendations, earnings and profitability.

Insider & Institutional Ownership

14.5% of One Group Hospitality shares are held by institutional investors. Comparatively, 32.3% of Good Times Restaurants shares are held by institutional investors. 35.9% of One Group Hospitality shares are held by company insiders. Comparatively, 8.4% of Good Times Restaurants shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings for One Group Hospitality and Good Times Restaurants, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
One Group Hospitality 0 0 0 0 N/A
Good Times Restaurants 0 0 1 0 3.00

Good Times Restaurants has a consensus price target of $6.00, indicating a potential upside of 138.10%. Given Good Times Restaurants’ higher probable upside, analysts plainly believe Good Times Restaurants is more favorable than One Group Hospitality.

Profitability

This table compares One Group Hospitality and Good Times Restaurants’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
One Group Hospitality -25.48% -68.30% -7.44%
Good Times Restaurants -2.59% -5.92% -4.17%

Volatility and Risk

One Group Hospitality has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, Good Times Restaurants has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500.

Earnings and Valuation

This table compares One Group Hospitality and Good Times Restaurants’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
One Group Hospitality $72.41 million 0.78 -$16.68 million ($0.80) -2.80
Good Times Restaurants $79.08 million 0.40 -$2.25 million ($0.18) -14.00

Good Times Restaurants has higher revenue and earnings than One Group Hospitality. Good Times Restaurants is trading at a lower price-to-earnings ratio than One Group Hospitality, indicating that it is currently the more affordable of the two stocks.

Summary

Good Times Restaurants beats One Group Hospitality on 9 of the 12 factors compared between the two stocks.

About One Group Hospitality

The ONE Group Hospitality, Inc., formerly Committed Capital Acquisition Corporation, is a hospitality company. The Company develops, owns and operates restaurants and lounges, and provides food and beverage services for hospitality venues, including hotels, casinos and other locations across the globe. It operates through three segments: owned STK units (STKs), F&B hospitality management agreements (F&B), and Other concepts (Other). Its STKs segment consists of leased restaurant locations. Its F&B segment consists of management agreements, in which the Company operates the food and beverage services in hotels or casinos and could include an STK. Its Other segment includes owned non-STK leased locations. Its restaurant brand is STK, a multi-unit steakhouse concept with locations in metropolitan cities around the globe. Its F&B hospitality management services include developing, managing and operating restaurants, bars, rooftop lounges, pools, banqueting and catering facilities.

About Good Times Restaurants

Good Times Restaurants Inc. operates and franchises Good Times Burgers & Frozen Custard (Good Times) restaurants and Bad Daddy’s Burger Bar concept (Bad Daddy’s). The Company operates through two segments: Good Times Burgers and Frozen Custard restaurants, and Bad Daddy’s Burger Bar restaurants. Good Times is a quick service restaurant concept. The menu of a Good Times restaurant includes hamburgers, cheeseburgers, chicken sandwiches, French fries, onion rings, soft drinks and frozen custard products. Its breakfast menu includes breakfast burritos, orange juice and coffee. Bad Daddy’s operates in the burger casual dining sector and is chef driven, full service, full bar concept. Its menu consists of burgers, salads, sandwiches and appetizers. Its bar focuses on local, craft microbrew beers and specialty cocktails. The Company operates through its subsidiaries, Good Times Drive Thru, Inc., BD of Colorado, LLC, Bad Daddy’s Franchise Development, LLC and Bad Daddy’s International, LLC.

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