ONE Group Hospitality (NASDAQ:STKS) vs. Wendy’s (NASDAQ:WEN) Head to Head Analysis

ONE Group Hospitality (NASDAQ:STKS) and Wendy’s (NASDAQ:WEN) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, valuation, institutional ownership and dividends.

Profitability

This table compares ONE Group Hospitality and Wendy’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ONE Group Hospitality	-11.45%	-57.00%	1.37%
Wendy’s	7.58%	145.93%	3.47%

Valuation and Earnings

This table compares ONE Group Hospitality and Wendy’s”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ONE Group Hospitality	$805.72 million	0.07	-$92.24 million	($4.04)	-0.43
Wendy’s	$2.18 billion	0.62	$165.07 million	$0.85	8.40

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

Institutional and Insider Ownership

29.1% of ONE Group Hospitality shares are owned by institutional investors. Comparatively, 86.0% of Wendy’s shares are owned by institutional investors. 25.7% of ONE Group Hospitality shares are owned by company insiders. Comparatively, 17.1% of Wendy’s shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings for ONE Group Hospitality and Wendy’s, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ONE Group Hospitality	1	2	1	0	2.00
Wendy’s	5	16	4	0	1.96

ONE Group Hospitality presently has a consensus price target of $4.50, indicating a potential upside of 157.14%. Wendy’s has a consensus price target of $8.81, indicating a potential upside of 23.34%. Given ONE Group Hospitality’s stronger consensus rating and higher possible upside, analysts clearly believe ONE Group Hospitality is more favorable than Wendy’s.

Volatility and Risk

ONE Group Hospitality has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500. Comparatively, Wendy’s has a beta of 0.4, meaning that its share price is 60% less volatile than the S&P 500.

Summary

Wendy’s beats ONE Group Hospitality on 10 of the 14 factors compared between the two stocks.

About ONE Group Hospitality

The ONE Group Hospitality, Inc., a restaurant company, develops, owns, operates, manages, and licenses restaurants and lounges worldwide. It operates through STK, Kona Grill, and ONE Hospitality segments. The company also provides turn-key food and beverage services for hospitality venues, including hotels, casinos, and other locations. Its hospitality food and beverage solutions include developing, managing, and operating restaurants, bars, rooftops, pools, banqueting, catering, private dining rooms, room service, and mini bars; and offers hospitality advisory and consulting services. The company operates restaurants primarily under the STK and Kona Grill brands. The ONE Group Hospitality, Inc. was founded in 2004 and is based in Denver, Colorado.

About Wendy’s

The Wendy’s Co. engages in operating, developing, and franchising a system of quick-service restaurants. It operates through the following segments: Wendy’s U.S., Wendy’s International, and Global Real Estate and Development. The Wendy’s U.S. segment includes the operation and franchising of Wendy’s restaurants in the U.S. The Wendy’s International segment is involved in the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. The Global Real Estate and Development segment focuses on real estate activity for owned sites and sites leased from third parties. The company was founded by R. David Thomas on November 15, 1969 and is headquartered in Dublin, OH.