Analyzing Friedman Industries (NASDAQ:FRD) & FAT Brands (NASDAQ:FATBB)

FAT Brands (NASDAQ:FATBBGet Free Report) and Friedman Industries (NASDAQ:FRDGet Free Report) are both small-cap materials companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitability, dividends, valuation and earnings.

Valuation and Earnings

This table compares FAT Brands and Friedman Industries”s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FAT Brands $574.14 million 0.03 -$189.85 million ($13.35) -0.07
Friedman Industries $646.91 million 0.50 $19.53 million $3.84 11.60

Friedman Industries has higher revenue and earnings than FAT Brands. FAT Brands is trading at a lower price-to-earnings ratio than Friedman Industries, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares FAT Brands and Friedman Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FAT Brands -39.33% N/A -17.57%
Friedman Industries 3.63% 18.29% 8.19%

Insider and Institutional Ownership

33.3% of Friedman Industries shares are owned by institutional investors. 59.9% of FAT Brands shares are owned by company insiders. Comparatively, 6.6% of Friedman Industries shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

FAT Brands has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, Friedman Industries has a beta of 1.62, meaning that its share price is 62% more volatile than the S&P 500.

Dividends

FAT Brands pays an annual dividend of $0.14 per share and has a dividend yield of 15.8%. Friedman Industries pays an annual dividend of $0.16 per share and has a dividend yield of 0.4%. FAT Brands pays out -1.0% of its earnings in the form of a dividend. Friedman Industries pays out 4.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Friedman Industries has raised its dividend for 1 consecutive years. FAT Brands is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current recommendations for FAT Brands and Friedman Industries, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FAT Brands 1 0 0 0 1.00
Friedman Industries 0 0 1 0 3.00

Summary

Friedman Industries beats FAT Brands on 13 of the 16 factors compared between the two stocks.

About FAT Brands

(Get Free Report)

FAT Brands Inc., a multi-brand restaurant franchising company, acquires, develops, markets, and manages quick service, fast casual, casual dining, and polished casual dining restaurant concepts worldwide. It owns restaurant brands, including Round Table Pizza, Marble Slab Creamery, Great American Cookies, Hot Dog on a Stick, Pretzelmaker, Fazoli's, Fatburger, Johnny Rockets, Elevation Burger, Yalla Mediterranean, Buffalo's Cafe and Buffalo's Express, Hurricane Grill & Wings, Ponderosa Steakhouse/Bonanza Steakhouse, Native Grill & Wings, Smokey Bones, and Twin Peaks. The company was incorporated in 2017 and is headquartered in Beverly Hills, California. FAT Brands Inc. is a subsidiary of Fog Cutter Holdings, LLC.

About Friedman Industries

(Get Free Report)

Friedman Industries, Incorporated engages in steel processing, pipe manufacturing and processing, and the steel and pipe distribution businesses the United States. It operates in two segments, Coil and Tubular. The Coil segment is involved in the conversion of steel coils into flat sheet and plate steel cut to customer specifications and reselling steel coils. This segment also processes customer-owned coils on a fee basis. The company sells coil products and processing services to approximately 200 customers located primarily in the midwestern, southwestern and southeastern regions of the United States. Its principal customers for these products and services are steel distributors and customers manufacturing steel products, such as steel buildings, railroad cars, barges, tanks and containers, trailers, component parts and other fabricated steel products. The Tubular segment manufactures line and oil country pipes, as well as pipes for structural applications. This segment sells its tubular products principally to steel and pipe distributors through its own sales force. The company was incorporated in 1965 and is headquartered in Longview, Texas.

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