Fogo de Chao (NASDAQ: FOGO) and Wingstop (NASDAQ:WING) 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 analyst recommendations, risk, earnings, institutional ownership, valuation, dividends and profitabiliy.

Profitability

This table compares Fogo de Chao and Wingstop’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fogo de Chao 7.92% 8.32% 4.69%
Wingstop 18.44% -33.91% 16.57%

Volatility & Risk

Fogo de Chao has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500. Comparatively, Wingstop has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500.

Institutional and Insider Ownership

90.6% of Fogo de Chao shares are owned by institutional investors. Comparatively, 85.7% of Wingstop shares are owned by institutional investors. 82.8% of Fogo de Chao shares are owned by insiders. Comparatively, 1.8% of Wingstop shares are owned 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.

Earnings and Valuation

This table compares Fogo de Chao and Wingstop’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fogo de Chao $295.79 million 1.32 $53.37 million $0.81 17.04
Wingstop $95.85 million 9.26 $33.58 million $0.60 51.05

Fogo de Chao has higher revenue and earnings than Wingstop. Fogo de Chao is trading at a lower price-to-earnings ratio than Wingstop, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings for Fogo de Chao and Wingstop, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fogo de Chao 0 3 3 0 2.50
Wingstop 0 2 7 1 2.90

Fogo de Chao currently has a consensus price target of $16.42, indicating a potential upside of 18.96%. Wingstop has a consensus price target of $34.60, indicating a potential upside of 12.96%. Given Fogo de Chao’s higher probable upside, equities research analysts clearly believe Fogo de Chao is more favorable than Wingstop.

Summary

Wingstop beats Fogo de Chao on 8 of the 15 factors compared between the two stocks.

About Fogo de Chao

Fogo de Chao, Inc. is a United States-based holding company. The Company, through its subsidiaries, operates upscale Brazilian churrascaria steakhouses under the brand of Fogo de Chao. The Company owns 100% of Brasa (Purchaser) Inc. (Brasa Purchaser), which owns 100% of Brasa (Holdings) Inc. (Brasa Holdings). The Company operates through two segments: United States and Brazil. It specializes in fire-roasting meats utilizing the centuries-old Southern Brazilian cooking technique of churrasco. The Company offers its guests a tasting menu of meats featuring up to 20 cuts, simply seasoned and fire-roasted to expose their natural flavors. The Company operates approximately 26 restaurants in the United States, 10 in Brazil and one in Mexico. The Company operates a range of restaurant formats, including in-line and free-standing locations. Its restaurants range in size from approximately 7,000 to 16,000 square feet, with seating from 200 to 500 guests.

About Wingstop

Wingstop Inc. is franchisor and operator of restaurants that specializes in cooked-to-order, hand-sauced and tossed chicken wings. The Company operates through two segments: Franchise and Company. As of December 31, 2016, the Company offers its guests 11 flavors on bone-in and boneless chicken wings paired with hand-cut, seasoned fries and sides. It is a casual chicken wings-focused restaurant chain with various concepts, which include wings as add-on menu items or focus on wings in a bar or sports-centric setting. The flavors include Atomic, Mango Habanero, Cajun, Original Hot, Louisiana Rub, Mild, Hickory Smoked BBQ, Lemon Pepper, Garlic Parmesan, Hawaiian and Teriyaki. It offers various order options, including eat-in, to go, individual, combo meals and family packs. The Company maintains Website hosting, and manages the development and maintenance of the mobile Wingstop application. It markets Wingstop products, services and restaurants through the Website, www.wingstop.com.

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