Denny’s (NASDAQ:DENN) and Star Buffet (OTCMKTS:STRZ) are both small-cap retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, valuation, analyst recommendations, institutional ownership, profitability and dividends.

Analyst Ratings

This is a summary of current recommendations and price targets for Denny’s and Star Buffet, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Denny’s 0 1 1 0 2.50
Star Buffet 0 0 0 0 N/A

Denny’s presently has a consensus target price of $17.00, indicating a potential upside of 4.36%. Given Denny’s’ higher probable upside, equities analysts clearly believe Denny’s is more favorable than Star Buffet.

Volatility and Risk

Denny’s has a beta of 0.14, suggesting that its share price is 86% less volatile than the S&P 500. Comparatively, Star Buffet has a beta of 0.64, suggesting that its share price is 36% less volatile than the S&P 500.

Institutional & Insider Ownership

89.9% of Denny’s shares are owned by institutional investors. 5.8% of Denny’s shares are owned by insiders. Comparatively, 53.6% of Star Buffet shares are owned 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.

Valuation & Earnings

This table compares Denny’s and Star Buffet’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Denny’s $529.17 million 1.93 $39.59 million $0.58 28.09
Star Buffet $26.52 million 0.07 $120,000.00 N/A N/A

Denny’s has higher revenue and earnings than Star Buffet.

Profitability

This table compares Denny’s and Star Buffet’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Denny’s 7.48% -40.31% 13.63%
Star Buffet -0.78% N/A -2.86%

Summary

Denny’s beats Star Buffet on 8 of the 11 factors compared between the two stocks.

Denny’s Company Profile

Denny's Corporation, through its subsidiary, Denny's, Inc., owns and operates full-service restaurant chains under the Denny's brand. As of December 27, 2017, it had 1,735 franchised, licensed, and company restaurants worldwide, including 128 restaurants in Canada, Puerto Rico, Mexico, New Zealand, Honduras, the Philippines, Costa Rica, Dominican Republic, the United Arab Emirates, Guam, CuraƧao, El Salvador, Guatemala, and the United Kingdom. The company was formerly known as Advantica Restaurant Group, Inc. and changed its name to Denny's Corporation in 2002. The company was founded in 1953 and is based in Spartanburg, South Carolina.

Star Buffet Company Profile

Star Buffet, Inc. owns and operates full service restaurants in the United States. As of July 19, 2018, it operated 27 restaurants in 10 states. The company operates its restaurants under the 4B's, JB's, Barnhill's Salads Buffet Desserts, Casa Bonita, and BuddyFreddys names. Star Buffet, Inc. was founded in 1997 and is based in Scottsdale, Arizona.

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