Meritage Hospitality Group (OTCMKTS:MHGU) and Brinker International (NYSE:EAT) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, dividends, institutional ownership, analyst recommendations and earnings.

Dividends

Brinker International pays an annual dividend of $1.52 per share and has a dividend yield of 3.1%. Meritage Hospitality Group does not pay a dividend. Brinker International pays out 43.4% of its earnings in the form of a dividend. Brinker International has raised its dividend for 7 consecutive years.

Analyst Ratings

This is a summary of recent ratings and price targets for Meritage Hospitality Group and Brinker International, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Meritage Hospitality Group 0 0 0 0 N/A
Brinker International 3 8 5 0 2.13

Brinker International has a consensus target price of $45.53, suggesting a potential downside of 8.55%. Given Brinker International’s higher possible upside, analysts clearly believe Brinker International is more favorable than Meritage Hospitality Group.

Volatility and Risk

Meritage Hospitality Group has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500. Comparatively, Brinker International has a beta of 0.02, suggesting that its share price is 98% less volatile than the S&P 500.

Valuation and Earnings

This table compares Meritage Hospitality Group and Brinker International’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Meritage Hospitality Group $235.77 million 0.49 $6.44 million N/A N/A
Brinker International $3.14 billion 0.61 $125.88 million $3.50 14.23

Brinker International has higher revenue and earnings than Meritage Hospitality Group.

Profitability

This table compares Meritage Hospitality Group and Brinker International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Meritage Hospitality Group N/A N/A N/A
Brinker International 4.52% -23.89% 12.08%

Summary

Brinker International beats Meritage Hospitality Group on 9 of the 12 factors compared between the two stocks.

Meritage Hospitality Group Company Profile

Meritage Hospitality Group Inc. operates quick-service and casual dining restaurants. The company operates restaurants under the Wendy's, Twisted Rooster, Crooked Goose, Freighters Eatery & Taproom, and Wheelhouse Kitchen & Cocktails brand names. As of November 13, 2018, it operated 314 restaurants in Arkansas, Connecticut, Florida, Georgia, Indiana, Massachusetts, Michigan, Missouri, Mississippi, North Carolina, South Carolina, Ohio, Oklahoma, Tennessee, Texas, and Virginia. The company was formerly known as Thomas Edison Inns, Inc. and changed its name to Meritage Hospitality Group Inc. in May 1996. Meritage Hospitality Group Inc. was incorporated in 1986 and is headquartered in Grand Rapids, Michigan.

Brinker International Company Profile

Brinker International, Inc., together with its subsidiaries, owns, develops, operates, and franchises casual dining restaurants in the United States and internationally. As of June 27, 2018, it owned, operated, or franchised 1,686 restaurants comprising 997 company-owned restaurants and 689 franchised restaurants under the Chili's Grill & Bar and Maggiano's Little Italy brand names. The company was founded in 1975 and is based in Dallas, Texas.

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