Analyzing Texas Roadhouse (NASDAQ:TXRH) and Rave Restaurant Group (NASDAQ:RAVE)

Texas Roadhouse (NASDAQ:TXRH) and Rave Restaurant Group (NASDAQ:RAVE) are both retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, earnings, valuation, institutional ownership, analyst recommendations, dividends and risk.

Valuation and Earnings

This table compares Texas Roadhouse and Rave Restaurant Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Texas Roadhouse	$6.06 billion	1.93	$405.55 million	$6.26	28.44
Rave Restaurant Group	$12.04 million	3.49	$2.70 million	$0.21	14.10

Texas Roadhouse has higher revenue and earnings than Rave Restaurant Group. Rave Restaurant Group is trading at a lower price-to-earnings ratio than Texas Roadhouse, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Texas Roadhouse and Rave Restaurant Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Texas Roadhouse	6.85%	27.86%	12.17%
Rave Restaurant Group	23.19%	19.22%	16.81%

Risk & Volatility

Texas Roadhouse has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, Rave Restaurant Group has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500.

Institutional & Insider Ownership

94.8% of Texas Roadhouse shares are owned by institutional investors. Comparatively, 15.1% of Rave Restaurant Group shares are owned by institutional investors. 0.5% of Texas Roadhouse shares are owned by company insiders. Comparatively, 28.0% of Rave Restaurant Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings for Texas Roadhouse and Rave Restaurant Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Texas Roadhouse	0	14	10	1	2.48
Rave Restaurant Group	0	1	0	0	2.00

Texas Roadhouse presently has a consensus price target of $195.77, suggesting a potential upside of 9.95%. Given Texas Roadhouse’s stronger consensus rating and higher probable upside, equities analysts plainly believe Texas Roadhouse is more favorable than Rave Restaurant Group.

Summary

Texas Roadhouse beats Rave Restaurant Group on 11 of the 15 factors compared between the two stocks.

About Texas Roadhouse

Texas Roadhouse, Inc., together with its subsidiaries, operates casual dining restaurants in the United States and internationally. It also operates and franchises restaurants under the Texas Roadhouse, Bubba's 33, and Jaggers names in 49 states and ten internationally. Texas Roadhouse, Inc. was founded in 1993 and is based in Louisville, Kentucky.

About Rave Restaurant Group

Rave Restaurant Group, Inc., together with its subsidiaries, engages in the operation and franchising of pizza buffet, delivery/carry-out (delco), and express restaurants under the Pizza Inn and Pie Five trademarks in the United States and internationally. The company operates through three segments: Pizza Inn Franchising, Pie Five Franchising, and Company-Owned Restaurants. Its buffet restaurants are located in free standing buildings or strip centers in retail developments that offer dine-in, carryout, and catering services, as well as delivery services. The company’s delco restaurants provide delivery and carryout services and are located in shopping centers or other in-line retail developments. Its Express restaurants serve customers through various non-traditional points of sale and are located in convenience stores, food courts, college campuses, airport terminals, travel plazas, athletic facilities, or other commercial facilities. The company’s Pizza Inn Express restaurants serve customers through a non-traditional, licensed, pizza-only model called Pizza Inn Express, located at production-oriented facilities. In addition, it operates and franchises fast casual restaurants under the Pie Five Pizza Company or Pie Five trademarks. The company was formerly known as Pizza Inn Holdings, Inc. and changed its name to Rave Restaurant Group, Inc. in January 2015. Rave Restaurant Group, Inc. was founded in 1958 and is based in The Colony, Texas.