BJ’s Restaurants (NASDAQ: RRGB) and Red Robin Gourmet Burgers (NASDAQ:RRGB) are both small-cap retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Analyst Ratings

This is a breakdown of recent recommendations for BJ’s Restaurants and Red Robin Gourmet Burgers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BJ’s Restaurants 0 5 5 0 2.50
Red Robin Gourmet Burgers 0 6 4 0 2.40

BJ’s Restaurants currently has a consensus target price of $58.64, indicating a potential downside of 18.56%. Red Robin Gourmet Burgers has a consensus target price of $53.20, indicating a potential upside of 33.50%. Given Red Robin Gourmet Burgers’ higher possible upside, analysts clearly believe Red Robin Gourmet Burgers is more favorable than BJ’s Restaurants.

Institutional & Insider Ownership

95.3% of BJ’s Restaurants shares are held by institutional investors. 6.8% of BJ’s Restaurants shares are held by company insiders. Comparatively, 1.6% of Red Robin Gourmet Burgers shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

BJ’s Restaurants has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Red Robin Gourmet Burgers has a beta of 0.32, meaning that its share price is 68% less volatile than the S&P 500.

Earnings and Valuation

This table compares BJ’s Restaurants and Red Robin Gourmet Burgers’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BJ’s Restaurants $1.03 billion 1.47 $44.78 million $1.41 51.06
Red Robin Gourmet Burgers $1.38 billion 0.38 $30.01 million $2.49 16.00

BJ’s Restaurants has higher earnings, but lower revenue than Red Robin Gourmet Burgers. Red Robin Gourmet Burgers is trading at a lower price-to-earnings ratio than BJ’s Restaurants, indicating that it is currently the more affordable of the two stocks.

Dividends

BJ’s Restaurants pays an annual dividend of $0.44 per share and has a dividend yield of 0.6%. Red Robin Gourmet Burgers does not pay a dividend. BJ’s Restaurants pays out 31.2% of its earnings in the form of a dividend.

Profitability

This table compares BJ’s Restaurants and Red Robin Gourmet Burgers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BJ’s Restaurants 5.35% 15.76% 6.15%
Red Robin Gourmet Burgers 1.01% 7.20% 3.15%

Summary

BJ’s Restaurants beats Red Robin Gourmet Burgers on 12 of the 16 factors compared between the two stocks.

About BJ’s Restaurants

BJ's Restaurants, Inc. owns and operates casual dining restaurants in the United States. Its restaurants offer pizzas, craft and other beers, appetizers, entrées, pastas, sandwiches, specialty salads, and desserts. As of September 4, 2018, the company owned and operated 201 casual dining restaurants located in the 27 states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Washington. The company operates its restaurants under the BJ's Restaurant & Brewhouse, BJ's Restaurant & Brewery, BJ's Pizza & Grill, and BJ's Grill brand names. BJ's Restaurants, Inc. was founded in 1978 and is based in Huntington Beach, California.

About Red Robin Gourmet Burgers

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, develops, operates, and franchises full-service and casual-dining restaurants in the United States and Canada. As of December 31, 2017, it operated 480 company-owned restaurants located in 39 states and 2 Canadian provinces; and had 86 casual-dining restaurants operated by franchisees in 15 states. The company was founded in 1969 and is headquartered in Greenwood Village, Colorado.

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