The Habit Restaurants (NASDAQ: HABT) and Ruby Tuesday (NYSE:RT) are both small-cap retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Institutional & Insider Ownership

94.5% of The Habit Restaurants shares are owned by institutional investors. Comparatively, 76.1% of Ruby Tuesday shares are owned by institutional investors. 5.8% of The Habit Restaurants shares are owned by insiders. Comparatively, 4.8% of Ruby Tuesday shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares The Habit Restaurants and Ruby Tuesday’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Habit Restaurants 1.64% 4.97% 2.16%
Ruby Tuesday -11.15% -5.30% -2.30%

Earnings and Valuation

This table compares The Habit Restaurants and Ruby Tuesday’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Habit Restaurants $307.71 million 0.84 $29.44 million $0.25 50.60
Ruby Tuesday $951.97 million 0.13 $29.49 million ($1.76) -1.19

Ruby Tuesday has higher revenue and earnings than The Habit Restaurants. Ruby Tuesday is trading at a lower price-to-earnings ratio than The Habit Restaurants, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

The Habit Restaurants has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500. Comparatively, Ruby Tuesday has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for The Habit Restaurants and Ruby Tuesday, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Habit Restaurants 0 2 4 0 2.67
Ruby Tuesday 0 0 0 0 N/A

The Habit Restaurants currently has a consensus price target of $19.70, suggesting a potential upside of 55.73%. Given The Habit Restaurants’ higher possible upside, equities research analysts clearly believe The Habit Restaurants is more favorable than Ruby Tuesday.

Summary

The Habit Restaurants beats Ruby Tuesday on 10 of the 12 factors compared between the two stocks.

About The Habit Restaurants

The Habit Restaurants, Inc. (Habit Burger Grill) is a fast casual restaurant company. The Company is engaged in preparing made-to-order char-grilled burgers and sandwiches featuring tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame. In addition, it offers sides, shakes and malts. The Company prepares its burgers with char-grilled preparation, topped with caramelized onions, melted cheese, lettuce and tomatoes. It operates a range of restaurant formats, including end-cap, free-standing, inline, end-cap drive-thru and traditional stand-alone drive-in, primarily within suburban shopping centers and retail settings. As of December 27, 2016, the Company had 172 locations in 15 markets in 10 states and the United Arab Emirates, including franchised/licensed locations (excluding six licensed locations in Santa Barbara County, California).

About Ruby Tuesday

Ruby Tuesday, Inc. owns and operates Ruby Tuesday casual dining and Lime Fresh Mexican Grill (Lime Fresh) casual restaurants. The Company also franchises the Ruby Tuesday concept in selected domestic and international markets, and the Lime Fresh concept in selected domestic markets. Its segments include Ruby Tuesday concept and Lime Fresh concept. As of March 1, 2016, the Company operated 729 Ruby Tuesday restaurants in 44 states, 13 foreign countries, and Guam, and there were 16 Lime Fresh restaurants in two states. Of those restaurants, it owned and operated approximately 649 Ruby Tuesday restaurants and franchised over 80 Ruby Tuesday restaurants, which consisted of 28 domestic and 52 international restaurants. It also owned and operated over eight Lime Fresh restaurants and franchised eight Lime Fresh domestic restaurants. The Company’s corporate-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic and Midwest of the United States.

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