Potbelly Corporation (NASDAQ: PBPB) and Fiesta Restaurant Group (NASDAQ:FRGI) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, institutional ownership, profitability, valuation, analyst recommendations, risk and dividends.

Analyst Recommendations

This is a breakdown of recent ratings for Potbelly Corporation and Fiesta Restaurant Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Potbelly Corporation 0 3 1 0 2.25
Fiesta Restaurant Group 1 5 1 0 2.00

Potbelly Corporation currently has a consensus target price of $13.67, suggesting a potential upside of 11.11%. Fiesta Restaurant Group has a consensus target price of $23.40, suggesting a potential upside of 27.17%. Given Fiesta Restaurant Group’s higher probable upside, analysts clearly believe Fiesta Restaurant Group is more favorable than Potbelly Corporation.

Profitability

This table compares Potbelly Corporation and Fiesta Restaurant Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Potbelly Corporation 1.03% 8.68% 6.15%
Fiesta Restaurant Group -2.75% 11.77% 6.95%

Risk & Volatility

Potbelly Corporation has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500. Comparatively, Fiesta Restaurant Group has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500.

Valuation & Earnings

This table compares Potbelly Corporation and Fiesta Restaurant Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Potbelly Corporation $415.98 million 0.74 $39.72 million $0.17 72.36
Fiesta Restaurant Group $701.79 million 0.70 $69.79 million ($0.72) -25.56

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

Insider and Institutional Ownership

72.8% of Potbelly Corporation shares are held by institutional investors. Comparatively, 94.0% of Fiesta Restaurant Group shares are held by institutional investors. 9.6% of Potbelly Corporation shares are held by company insiders. Comparatively, 2.2% of Fiesta Restaurant Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Potbelly Corporation beats Fiesta Restaurant Group on 7 of the 13 factors compared between the two stocks.

Potbelly Corporation Company Profile

Potbelly Corporation owns and operates Potbelly Sandwich Works sandwich shops in the United States. The Company has domestic and international franchise operations of Potbelly Sandwich Works sandwich shops. As of December 25, 2016, the Company operated Potbelly Sandwich Works sandwich shops in 29 states and the District of Columbia. As of December 25, 2016, the Company had a domestic base of 441 shops in 29 states and the District of Columbia. Of these, the company operated 411 shops, and franchisees operated 30 shops, as of December 25, 2016. As of December 25, 2016, the Company had 13 international franchised shops, which included 11 shops in the Middle East, a shop in the United Kingdom and a shop in Canada. As of December 25, 2016, the Company had domestic franchise shops in Arkansas, Iowa, Illinois, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Texas and Virginia.

Fiesta Restaurant Group Company Profile

Fiesta Restaurant Group, Inc. owns, operates and franchises two fast-casual restaurant brands, Pollo Tropical and Taco Cabana through its subsidiaries Pollo Operations, Inc., and its subsidiaries, and Pollo Franchise, Inc., (collectively Pollo Tropical) and Taco Cabana, Inc. and its subsidiaries (collectively Taco Cabana). The Company operates through the Pollo Tropical and Taco Cabana segments. The Company’s Pollo Tropical restaurants offer Caribbean menu items, featuring its bone-in chicken marinated in blend of tropical fruit juices and grilled over an open flame. The Company also offers catering for parties and corporate events. The Company’s Taco Cabana restaurants serves Mexican food, including flame-grilled steak and chicken fajitas served on sizzling iron skillets, quesadillas, hand-rolled flautas, enchiladas, burritos, tacos, fresh-made flour tortillas, customizable salads served in its Cabana Bowl, and its breakfast tacos.

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