Reviewing Aramark (ARMK) & Ruth’s Hospitality Group (RUTH)
Aramark (NYSE: ARMK) and Ruth’s Hospitality Group (NASDAQ:RUTH) are both consumer staples companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, institutional ownership, dividends, valuation, analyst recommendations, profitability and risk.
This is a breakdown of recent ratings and recommmendations for Aramark and Ruth’s Hospitality Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ruth’s Hospitality Group||0||3||1||0||2.25|
Aramark presently has a consensus target price of $45.17, suggesting a potential upside of 5.46%. Ruth’s Hospitality Group has a consensus target price of $22.00, suggesting a potential upside of 3.29%. Given Aramark’s stronger consensus rating and higher possible upside, equities analysts clearly believe Aramark is more favorable than Ruth’s Hospitality Group.
Earnings and Valuation
This table compares Aramark and Ruth’s Hospitality Group’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Aramark||$14.49 billion||0.72||$1.29 billion||$1.37||31.26|
|Ruth’s Hospitality Group||$396.96 million||1.63||$62.65 million||$1.01||21.09|
Aramark has higher revenue and earnings than Ruth’s Hospitality Group. Ruth’s Hospitality Group is trading at a lower price-to-earnings ratio than Aramark, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
94.7% of Aramark shares are held by institutional investors. Comparatively, 81.8% of Ruth’s Hospitality Group shares are held by institutional investors. 2.9% of Aramark shares are held by insiders. Comparatively, 6.7% of Ruth’s Hospitality Group 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.
Aramark pays an annual dividend of $0.41 per share and has a dividend yield of 1.0%. Ruth’s Hospitality Group pays an annual dividend of $0.36 per share and has a dividend yield of 1.7%. Aramark pays out 29.9% of its earnings in the form of a dividend. Ruth’s Hospitality Group pays out 35.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Ruth’s Hospitality Group has increased its dividend for 2 consecutive years. Ruth’s Hospitality Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
Aramark has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500. Comparatively, Ruth’s Hospitality Group has a beta of 0.33, indicating that its share price is 67% less volatile than the S&P 500.
This table compares Aramark and Ruth’s Hospitality Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ruth’s Hospitality Group||7.97%||37.86%||15.69%|
Aramark beats Ruth’s Hospitality Group on 11 of the 18 factors compared between the two stocks.
Aramark is a global provider of food, facilities and uniform services to education, healthcare, business and industry, and sports, leisure and corrections clients. The Company operates through three segments: Food and Support Services North America (FSS North America), Food and Support Services International (FSS International), and Uniform and Career Apparel (Uniform). FSS North America and FSS International segments include food, refreshment, specialized dietary and support services, including facility maintenance and housekeeping, provided to business, educational and healthcare institutions and in sports, leisure and other facilities. The Uniform segment includes rental, sale, cleaning, maintenance and delivery of personalized uniforms and other textile items to clients in a range of industries in the United States, Puerto Rico, Japan and Canada, including manufacturing, transportation, construction, restaurants and hotels, healthcare and pharmaceutical industries.
About Ruth’s Hospitality Group
Ruth’s Hospitality Group, Inc. develops and operates fine dining restaurants under the name, Ruth’s Chris Steak House. The Company operates through two segments. As of December 25, 2016, the Company-owned steakhouse restaurant segment included 68 Ruth’s Chris Steak House restaurants and one Ruth’s Chris Steak House restaurant, and the franchise operations segment included 81 franchisee-owned Ruth’s Chris Steak House restaurants. Its restaurant’s menu features a selection of Prime and Choice grade steaks, and other offerings. Its menu also includes lamb chops, fish, shrimp, crab, chicken and lobster. Its Ruth’s Chris restaurants offer 10 to 13 appetizer items, including Orleans-style barbequed shrimp, mushrooms stuffed with crabmeat, lobster bisque and osso bucco ravioli. It also offers a range of potatoes and vegetables as side dishes. For dessert, creme brulee, white chocolate bread pudding, cheesecake, fresh seasonal berries with sweet cream sauce and other selections are available.
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