Fogo de Chao (NASDAQ: FOGO) and Red Robin Gourmet Burgers (NASDAQ:RRGB) are both small-cap retail/wholesale companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, institutional ownership, risk, valuation, earnings, profitability and analyst recommendations.

Risk and Volatility

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

Profitability

This table compares Fogo de Chao and Red Robin Gourmet Burgers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fogo de Chao 7.40% 8.08% 4.58%
Red Robin Gourmet Burgers 0.64% 8.00% 3.18%

Earnings and Valuation

This table compares Fogo de Chao and Red Robin Gourmet Burgers’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fogo de Chao $304.00 million 1.14 $52.73 million $0.79 15.57
Red Robin Gourmet Burgers $1.32 billion 0.60 $131.93 million $0.64 96.49

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

Analyst Recommendations

This is a summary of recent ratings and target prices for Fogo de Chao and Red Robin Gourmet Burgers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fogo de Chao 0 3 3 0 2.50
Red Robin Gourmet Burgers 0 4 6 0 2.60

Fogo de Chao presently has a consensus target price of $16.42, suggesting a potential upside of 33.47%. Red Robin Gourmet Burgers has a consensus target price of $72.67, suggesting a potential upside of 17.68%. Given Fogo de Chao’s higher possible upside, analysts clearly believe Fogo de Chao is more favorable than Red Robin Gourmet Burgers.

Institutional & Insider Ownership

85.7% of Fogo de Chao shares are held by institutional investors. 82.8% of Fogo de Chao shares are held by insiders. Comparatively, 2.7% of Red Robin Gourmet Burgers shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Fogo de Chao beats Red Robin Gourmet Burgers on 8 of the 14 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 Red Robin Gourmet Burgers

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, primarily develops, operates, and franchises full-service restaurants in North America and focuses on serving selection of gourmet burgers. The Company’s menu features a line of gourmet burgers, which it makes from ground beef, as well as its line of Red’s Tavern Double Burgers and its Red Robin’s line of half-pound Angus beef burgers with various toppings. The Company also offers burgers made from chicken breasts, fish fillets, turkey patties, as well as vegetarian and vegan options. The Company offered a selection of buns, including ciabatta, gluten free, sesame, onion, whole grain, jalapeno and lettuce wraps a range of toppings, including fresh guacamole, house made barbeque sauces, aiolis, grilled pineapple, crispy onion straws, sauteed mushrooms, fried jalapenos, bruschetta salsa, coleslaw, eight different cheese choices and a fried egg, as of December 25, 2016.

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