Del Taco Restaurants (NASDAQ: RUTH) and Ruth’s Hospitality Group (NASDAQ:RUTH) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, valuation, profitability, analyst recommendations, earnings, institutional ownership and dividends.

Institutional & Insider Ownership

77.7% of Del Taco Restaurants shares are held by institutional investors. Comparatively, 84.8% of Ruth’s Hospitality Group shares are held by institutional investors. 14.6% of Del Taco Restaurants shares are held by company insiders. Comparatively, 7.5% of Ruth’s Hospitality Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Del Taco Restaurants and Ruth’s Hospitality Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Del Taco Restaurants 0 1 6 0 2.86
Ruth’s Hospitality Group 0 3 0 0 2.00

Del Taco Restaurants currently has a consensus price target of $16.64, suggesting a potential upside of 40.09%. Ruth’s Hospitality Group has a consensus price target of $29.00, suggesting a potential downside of 3.65%. Given Del Taco Restaurants’ stronger consensus rating and higher probable upside, research analysts clearly believe Del Taco Restaurants is more favorable than Ruth’s Hospitality Group.

Earnings & Valuation

This table compares Del Taco Restaurants and Ruth’s Hospitality Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Del Taco Restaurants $471.46 million 0.97 $49.87 million $0.52 22.85
Ruth’s Hospitality Group $414.82 million 2.23 $30.13 million $1.10 27.36

Del Taco Restaurants has higher revenue and earnings than Ruth’s Hospitality Group. Del Taco Restaurants is trading at a lower price-to-earnings ratio than Ruth’s Hospitality Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Ruth’s Hospitality Group pays an annual dividend of $0.44 per share and has a dividend yield of 1.5%. Del Taco Restaurants does not pay a dividend. Ruth’s Hospitality Group pays out 40.0% of its earnings in the form of a dividend. Ruth’s Hospitality Group has increased its dividend for 4 consecutive years.

Profitability

This table compares Del Taco Restaurants and Ruth’s Hospitality Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Del Taco Restaurants 9.79% 4.84% 2.68%
Ruth’s Hospitality Group 7.92% 45.99% 17.12%

Risk & Volatility

Del Taco Restaurants has a beta of -0.09, suggesting that its share price is 109% less volatile than the S&P 500. Comparatively, Ruth’s Hospitality Group has a beta of 0.35, suggesting that its share price is 65% less volatile than the S&P 500.

Summary

Ruth’s Hospitality Group beats Del Taco Restaurants on 9 of the 17 factors compared between the two stocks.

About Del Taco Restaurants

Del Taco Restaurants, Inc. develops, franchises, owns, and operates Del Taco quick-service Mexican-American restaurants in the United States. The company's restaurants offer Mexican inspired and American classic dishes. As of January 2, 2018, it operated 312 company-operated and 252 franchise-operated Del Taco restaurants located in 14 states, including 1 franchise-operated unit in Guam. Del Taco Restaurants, Inc. was founded in 1964 and is headquartered in Lake Forest, California.

About Ruth’s Hospitality Group

Ruth's Hospitality Group, Inc., together with its subsidiaries, develops, operates, and franchises fine dining restaurants under the Ruth's Chris Steak House name. Its restaurants offer food and beverage products to special occasion diners and frequent customers, as well as business clientele. As of December 31, 2017, the company had 155 Ruth's Chris Steak House restaurants, including 77 company-owned restaurants; 2 restaurant operating under a contractual agreement; and 76 franchisee-owned restaurants comprising 21 international franchisee-owned restaurants in Aruba, Canada, China, Hong Kong, Indonesia, Japan, Mexico, Panama, Singapore, Taiwan, and the United Arab Emirates. Ruth's Hospitality Group, Inc. was founded in 1965 and is headquartered in Winter Park, Florida.

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