The Habit Restaurants (NASDAQ: HABT) and El Pollo Loco Holdings (NASDAQ:LOCO) are both small-cap retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, institutional ownership, valuation, dividends and profitability.

Risk & Volatility

The Habit Restaurants has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500. Comparatively, El Pollo Loco Holdings has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500.

Insider and Institutional Ownership

98.3% of The Habit Restaurants shares are owned by institutional investors. Comparatively, 77.0% of El Pollo Loco Holdings shares are owned by institutional investors. 5.8% of The Habit Restaurants shares are owned by company insiders. Comparatively, 45.9% of El Pollo Loco Holdings shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares The Habit Restaurants and El Pollo Loco Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Habit Restaurants 1.64% 4.97% 2.16%
El Pollo Loco Holdings 4.66% 9.56% 5.52%

Earnings & Valuation

This table compares The Habit Restaurants and El Pollo Loco Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Habit Restaurants $307.71 million 0.93 $29.44 million $0.25 56.00
El Pollo Loco Holdings $393.64 million 1.20 $62.17 million $0.46 26.52

El Pollo Loco Holdings has higher revenue and earnings than The Habit Restaurants. El Pollo Loco Holdings is trading at a lower price-to-earnings ratio than The Habit Restaurants, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for The Habit Restaurants and El Pollo Loco Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Habit Restaurants 0 2 4 0 2.67
El Pollo Loco Holdings 0 4 1 0 2.20

The Habit Restaurants presently has a consensus price target of $19.70, suggesting a potential upside of 40.71%. El Pollo Loco Holdings has a consensus price target of $14.67, suggesting a potential upside of 20.22%. Given The Habit Restaurants’ stronger consensus rating and higher probable upside, equities research analysts plainly believe The Habit Restaurants is more favorable than El Pollo Loco Holdings.

Summary

El Pollo Loco Holdings beats The Habit Restaurants on 8 of the 14 factors compared between the two stocks.

About The Habit Restaurants

The Habit Restaurants, Inc. (Habit Burger Grill) is a fast casual restaurant company. The Company is engaged in preparing made-to-order char-grilled burgers and sandwiches featuring tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame. In addition, it offers sides, shakes and malts. The Company prepares its burgers with char-grilled preparation, topped with caramelized onions, melted cheese, lettuce and tomatoes. It operates a range of restaurant formats, including end-cap, free-standing, inline, end-cap drive-thru and traditional stand-alone drive-in, primarily within suburban shopping centers and retail settings. As of December 27, 2016, the Company had 172 locations in 15 markets in 10 states and the United Arab Emirates, including franchised/licensed locations (excluding six licensed locations in Santa Barbara County, California).

About El Pollo Loco Holdings

El Pollo Loco Holdings, Inc. specializes in fire-grilling citrus-marinated chicken and operates in the limited service restaurant (LSR) segment. The Company’s menu features its signature product, citrus-marinated fire-grilled chicken, and a range of Mexican-inspired entrees that it creates from chicken. Every day in every restaurant, the Company marinates and fire-grills its chicken over open flames, and hand-slices whole tomatoes, avocados, serrano peppers and cilantro to make its salsas, guacamole and cilantro dressings from scratch. The Company also offers burritos, salads, tostadas, bowls, stuffed quesadillas and chicken entrees. The Company’s entrees include Chicken Avocado Burrito, Under 500 Calorie entrees, Ultimate Pollo Bowl, and Stuffed Chicken Avocado Quesadilla. As of December 28, 2016, the Company had 460 restaurants, consisting of 201 Company-operated and 259 franchised restaurants. The Company also offers additional proteins, such as shrimp, carnitas and beef.

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