Papa Murphy’s Holdings (NASDAQ: FRSH) and Carrols Restaurant Group (NASDAQ:TAST) are both small-cap retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, institutional ownership, profitability, dividends and earnings.

Profitability

This table compares Papa Murphy’s Holdings and Carrols Restaurant Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Papa Murphy’s Holdings -8.43% 3.16% 1.15%
Carrols Restaurant Group 3.44% 6.33% 1.86%

Volatility and Risk

Papa Murphy’s Holdings has a beta of 0.06, meaning that its stock price is 94% less volatile than the S&P 500. Comparatively, Carrols Restaurant Group has a beta of 0.03, meaning that its stock price is 97% less volatile than the S&P 500.

Valuation and Earnings

This table compares Papa Murphy’s Holdings and Carrols Restaurant Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Papa Murphy’s Holdings $125.10 million 0.78 $16.53 million ($0.63) -9.13
Carrols Restaurant Group $999.03 million 0.39 $80.24 million $0.72 15.42

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Papa Murphy’s Holdings and Carrols Restaurant Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Papa Murphy’s Holdings 0 4 0 0 2.00
Carrols Restaurant Group 0 0 2 0 3.00

Papa Murphy’s Holdings presently has a consensus price target of $4.75, suggesting a potential downside of 17.39%. Carrols Restaurant Group has a consensus price target of $15.50, suggesting a potential upside of 39.64%. Given Carrols Restaurant Group’s stronger consensus rating and higher possible upside, analysts plainly believe Carrols Restaurant Group is more favorable than Papa Murphy’s Holdings.

Institutional and Insider Ownership

36.5% of Papa Murphy’s Holdings shares are held by institutional investors. Comparatively, 86.8% of Carrols Restaurant Group shares are held by institutional investors. 3.1% of Papa Murphy’s Holdings shares are held by insiders. Comparatively, 5.6% of Carrols Restaurant Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Carrols Restaurant Group beats Papa Murphy’s Holdings on 12 of the 14 factors compared between the two stocks.

Papa Murphy’s Holdings Company Profile

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.

Carrols Restaurant Group Company Profile

Carrols Restaurant Group, Inc. is a holding company and conducts all of its operations through its subsidiary, Carrols Corporation (Carrols) and Carrols’ subsidiary, Carrols LLC. The Company is a restaurant company and Burger King franchisee in the United States. As of January 1, 2017, the Company had owned and operated 753 Burger King restaurants under the name Burger King in 16 Northeastern, Midwestern and Southeastern states. Burger King restaurants feature the flame-broiled Whopper sandwich, as well as a range of hamburgers, chicken and other specialty sandwiches, French fries, salads, breakfast items, hot dogs, snacks, smoothies, frappes and other offerings. The Company’s Burger King restaurants are located in various states, such as Illinois, Indiana, Kentucky, Maine, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Vermont, Virginia and West Virginia.

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