El Pollo Loco (NASDAQ: LOCO) and The ONE Group Hospitality (NASDAQ:STKS) are both small-cap cyclical consumer goods & services companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, risk, valuation and profitability.

Earnings & Valuation

This table compares El Pollo Loco and The ONE Group Hospitality’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
El Pollo Loco $380.12 million 1.09 $18.33 million $0.23 46.52
The ONE Group Hospitality $72.41 million 0.86 -$16.68 million ($0.79) -3.13

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

Insider & Institutional Ownership

78.1% of El Pollo Loco shares are owned by institutional investors. Comparatively, 14.5% of The ONE Group Hospitality shares are owned by institutional investors. 45.9% of El Pollo Loco shares are owned by insiders. Comparatively, 35.9% of The ONE Group Hospitality shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for El Pollo Loco and The ONE Group Hospitality, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
El Pollo Loco 0 3 1 0 2.25
The ONE Group Hospitality 0 0 0 0 N/A

El Pollo Loco currently has a consensus price target of $13.00, indicating a potential upside of 21.50%. Given El Pollo Loco’s higher possible upside, equities research analysts clearly believe El Pollo Loco is more favorable than The ONE Group Hospitality.

Profitability

This table compares El Pollo Loco and The ONE Group Hospitality’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
El Pollo Loco 2.27% 9.14% 5.37%
The ONE Group Hospitality -25.48% -68.30% -7.44%

Risk & Volatility

El Pollo Loco has a beta of 0.31, meaning that its stock price is 69% less volatile than the S&P 500. Comparatively, The ONE Group Hospitality has a beta of 1.64, meaning that its stock price is 64% more volatile than the S&P 500.

Summary

El Pollo Loco beats The ONE Group Hospitality on 11 of the 12 factors compared between the two stocks.

About El Pollo Loco

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.

About The ONE Group Hospitality

The ONE Group Hospitality, Inc., formerly Committed Capital Acquisition Corporation, is a hospitality company. The Company develops, owns and operates restaurants and lounges, and provides food and beverage services for hospitality venues, including hotels, casinos and other locations across the globe. It operates through three segments: owned STK units (STKs), F&B hospitality management agreements (F&B), and Other concepts (Other). Its STKs segment consists of leased restaurant locations. Its F&B segment consists of management agreements, in which the Company operates the food and beverage services in hotels or casinos and could include an STK. Its Other segment includes owned non-STK leased locations. Its restaurant brand is STK, a multi-unit steakhouse concept with locations in metropolitan cities around the globe. Its F&B hospitality management services include developing, managing and operating restaurants, bars, rooftop lounges, pools, banqueting and catering facilities.

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