Sonic (NASDAQ: SONC) and Papa Murphy's (NASDAQ:FRSH) 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 risk, dividends, profitability, valuation, analyst recommendations, institutional ownership and earnings.

Analyst Ratings

This is a summary of recent recommendations and price targets for Sonic and Papa Murphy's, as provided by

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sonic 1 6 5 0 2.33
Papa Murphy's 0 2 0 0 2.00

Sonic presently has a consensus target price of $29.00, suggesting a potential upside of 3.46%. Papa Murphy's has a consensus target price of $4.75, suggesting a potential downside of 15.48%. Given Sonic’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Sonic is more favorable than Papa Murphy's.


This table compares Sonic and Papa Murphy's’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sonic 13.68% -31.39% 9.85%
Papa Murphy's -9.72% 5.05% 1.83%

Earnings & Valuation

This table compares Sonic and Papa Murphy's’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sonic $477.27 million 2.29 $63.66 million $1.48 18.94
Papa Murphy's $126.88 million 0.75 $2.64 million ($0.71) -7.92

Sonic has higher revenue and earnings than Papa Murphy's. Papa Murphy's is trading at a lower price-to-earnings ratio than Sonic, indicating that it is currently the more affordable of the two stocks.


Sonic pays an annual dividend of $0.64 per share and has a dividend yield of 2.3%. Papa Murphy's does not pay a dividend. Sonic pays out 43.2% of its earnings in the form of a dividend.

Insider and Institutional Ownership

32.3% of Papa Murphy's shares are held by institutional investors. 6.2% of Sonic shares are held by company insiders. Comparatively, 3.1% of Papa Murphy's shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Sonic has a beta of 1.74, suggesting that its stock price is 74% more volatile than the S&P 500. Comparatively, Papa Murphy's has a beta of 0.14, suggesting that its stock price is 86% less volatile than the S&P 500.


Sonic beats Papa Murphy's on 13 of the 16 factors compared between the two stocks.

About Sonic

Sonic Corp. operates and franchises the chain of drive-thru restaurants (Sonic Drive-Ins) in the United States. As of August 31, 2016, 3,557 Sonic Drive-Ins were in operation from coast to coast in 45 states, consisting of 345 Company drive-thrus and 3,212 franchise drive-thrus. As of August 31, 2016, its restaurant design and construction consisted of a kitchen housed in a one-story building, which was approximately 1,500 square feet, flanked by canopy-covered rows of 16 to 24 parking spaces, with each space having its own payment terminal, intercom speaker system and menu board. At a Sonic Drive-In, a customer drives into one of the parking spaces, orders through the intercom speaker system and has the food delivered by a carhop and Sonic Drive-Ins also include a drive-thru lane and patio seating to provide customers with alternative dining options. Its food items include specialty drinks, such as cherry limeades and slushes, ice cream desserts and chicken sandwiches and hamburgers.

About Papa Murphy's

Papa Murphy’s Holdings, Inc. is a holding company. The Company, together with its subsidiaries, is a franchisor and operator of the Take ‘N’ Bake pizza chain in the United States. The Company franchises the right to operate Take ‘N’ Bake pizza franchises and operates Take ‘N’ Bake pizza stores owned by the Company. The Company operates through three segments: Domestic Company Stores, Domestic Franchise and International. Its Domestic Franchise segment consists of its domestic franchised stores, which represent its system-wide stores and derives its revenues from franchise and development fees and the collection of franchise royalties. The Domestic Company Stores segment consists of its Company-owned stores in the United States and derives its revenues from retail sales of pizza and side items to the general public. Its International segment consists of its stores outside of the United States, all of which are franchised and derives its revenues from franchise and development fees.

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