Nathan’s Famous (NASDAQ: PZZA) and Papa John’s Int’l (NASDAQ:PZZA) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, risk, profitability, valuation and dividends.

Dividends

Nathan’s Famous pays an annual dividend of $1.00 per share and has a dividend yield of 1.2%. Papa John’s Int’l pays an annual dividend of $0.90 per share and has a dividend yield of 1.9%. Papa John’s Int’l pays out 34.4% of its earnings in the form of a dividend. Papa John’s Int’l has increased its dividend for 4 consecutive years. Papa John’s Int’l is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Nathan’s Famous has a beta of -0.25, indicating that its stock price is 125% less volatile than the S&P 500. Comparatively, Papa John’s Int’l has a beta of 0.46, indicating that its stock price is 54% less volatile than the S&P 500.

Valuation & Earnings

This table compares Nathan’s Famous and Papa John’s Int’l’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nathan’s Famous $104.20 million 3.45 $2.63 million N/A N/A
Papa John’s Int’l $1.78 billion 0.82 $102.29 million $2.62 17.70

Papa John’s Int’l has higher revenue and earnings than Nathan’s Famous.

Insider & Institutional Ownership

40.4% of Nathan’s Famous shares are owned by institutional investors. Comparatively, 82.7% of Papa John’s Int’l shares are owned by institutional investors. 32.4% of Nathan’s Famous shares are owned by company insiders. Comparatively, 31.8% of Papa John’s Int’l shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Nathan’s Famous and Papa John’s Int’l’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nathan’s Famous 4.34% -12.96% 12.03%
Papa John’s Int’l 4.54% -47.37% 13.75%

Analyst Ratings

This is a summary of recent recommendations and price targets for Nathan’s Famous and Papa John’s Int’l, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nathan’s Famous 0 0 0 0 N/A
Papa John’s Int’l 0 4 5 0 2.56

Papa John’s Int’l has a consensus target price of $58.38, suggesting a potential upside of 25.86%. Given Papa John’s Int’l’s higher possible upside, analysts plainly believe Papa John’s Int’l is more favorable than Nathan’s Famous.

Summary

Papa John’s Int’l beats Nathan’s Famous on 10 of the 15 factors compared between the two stocks.

Nathan’s Famous Company Profile

Nathan's Famous, Inc., together with its subsidiaries, operates in the foodservice industry. The company owns and franchises restaurants under the Nathan's Famous brand name, as well as sells products bearing the Nathan's Famous trademarks through various channels of distribution. It also has license agreements for the manufacture, distribution, marketing, and sale of Nathan's Famous branded hot dogs, sausages, and corned beef products in refrigerated consumer packages to be resold through retail channels, such as supermarkets, groceries, mass merchandisers, and club stores; and other Nathan's Famous branded refrigerated meat products in consumer packages to be resold through retail channels. In addition, the company has license agreements to manufacture Nathan's Famous branded hot dog and sausage products in bulk for use in the food service industry; for supplying Nathan's Famous natural casing and skinless hot dogs in bulk for use in the Nathan's Famous restaurant system; to manufacture proprietary spices; to manufacture and sell various products, including mustard, salsa, sauerkraut, and pickles; to produce and sell French fries and onion rings for retail sale; and to manufacture and sell miniature bagel dogs, franks-in-a-blanket, and other hors d'oeuvres through club stores, supermarkets, and other retail food stores. Further, the company sells Nathan's products directly to end users or to various foodservice distributors, as well as provides Arthur Treacher's brand fish fillets. As of March 25, 2018, its restaurant system consisted of 5 company-owned units in the New York City metropolitan area; and 276 franchised units located in 20 states and 12 foreign countries. Nathan's Famous, Inc. was founded in 1916 and is based in Jericho, New York.

Papa John’s Int’l Company Profile

Papa John's International, Inc. operates and franchises pizza delivery and carryout restaurants under the Papa John's trademark in the United States and internationally. It operates through five segments: Domestic Company-Owned Restaurants, North America Commissaries, North America Franchising, International Operations, and All Others. The company also operates dine-in and delivery restaurants. As of December 31, 2017, it operated 5,199 Papa John's restaurants, which included 743 company-owned and 4,456 franchised restaurants. The company was founded in 1984 and is headquartered in Louisville, Kentucky.

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