Carrols Restaurant Group (NASDAQ: TAST) and Wingstop (NASDAQ:WING) 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 dividends, analyst recommendations, earnings, risk, institutional ownership, valuation and profitability.

Profitability

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

Net Margins Return on Equity Return on Assets
Carrols Restaurant Group 3.44% 6.33% 1.86%
Wingstop 19.28% -28.04% 17.56%

Dividends

Wingstop pays an annual dividend of $0.07 per share and has a dividend yield of 0.2%. Carrols Restaurant Group does not pay a dividend. Wingstop pays out 10.9% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current recommendations for Carrols Restaurant Group and Wingstop, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Carrols Restaurant Group 0 0 2 0 3.00
Wingstop 0 3 5 1 2.78

Carrols Restaurant Group presently has a consensus target price of $15.50, indicating a potential upside of 40.27%. Wingstop has a consensus target price of $34.38, indicating a potential upside of 2.28%. Given Carrols Restaurant Group’s stronger consensus rating and higher possible upside, equities analysts clearly believe Carrols Restaurant Group is more favorable than Wingstop.

Risk & Volatility

Carrols Restaurant Group has a beta of 0.04, indicating that its stock price is 96% less volatile than the S&P 500. Comparatively, Wingstop has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Institutional and Insider Ownership

86.8% of Carrols Restaurant Group shares are held by institutional investors. 5.6% of Carrols Restaurant Group shares are held by company insiders. Comparatively, 1.8% of Wingstop shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Carrols Restaurant Group $999.03 million 0.39 $80.24 million $0.72 15.35
Wingstop $97.80 million 9.99 $35.13 million $0.64 52.52

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

Summary

Carrols Restaurant Group beats Wingstop on 10 of the 17 factors compared between the two stocks.

About Carrols Restaurant Group

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.

About Wingstop

Wingstop Inc. is franchisor and operator of restaurants that specializes in cooked-to-order, hand-sauced and tossed chicken wings. The Company operates through two segments: Franchise and Company. As of December 31, 2016, the Company offers its guests 11 flavors on bone-in and boneless chicken wings paired with hand-cut, seasoned fries and sides. It is a casual chicken wings-focused restaurant chain with various concepts, which include wings as add-on menu items or focus on wings in a bar or sports-centric setting. The flavors include Atomic, Mango Habanero, Cajun, Original Hot, Louisiana Rub, Mild, Hickory Smoked BBQ, Lemon Pepper, Garlic Parmesan, Hawaiian and Teriyaki. It offers various order options, including eat-in, to go, individual, combo meals and family packs. The Company maintains Website hosting, and manages the development and maintenance of the mobile Wingstop application. It markets Wingstop products, services and restaurants through the Website, www.wingstop.com.

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