Chuy’s Holdings (CHUY) & Zoe’s Kitchen (ZOES) Critical Contrast

Zoe’s Kitchen (NYSE: ZOES) and Chuy’s Holdings (NASDAQ:CHUY) are both small-cap retail/wholesale companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, profitability, dividends, analyst recommendations, risk, valuation and institutional ownership.

Earnings and Valuation

This table compares Zoe’s Kitchen and Chuy’s Holdings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Zoe’s Kitchen $294.14 million 0.83 $22.57 million ($0.02) -627.00
Chuy’s Holdings $346.03 million 1.08 $41.16 million $0.99 22.27

Chuy’s Holdings has higher revenue and earnings than Zoe’s Kitchen. Zoe’s Kitchen is trading at a lower price-to-earnings ratio than Chuy’s Holdings, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Zoe’s Kitchen and Chuy’s Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zoe’s Kitchen -0.07% -0.27% -0.16%
Chuy’s Holdings 4.86% 11.16% 7.30%

Volatility and Risk

Zoe’s Kitchen has a beta of 0.34, suggesting that its stock price is 66% less volatile than the S&P 500. Comparatively, Chuy’s Holdings has a beta of -0.02, suggesting that its stock price is 102% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Zoe’s Kitchen and Chuy’s Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zoe’s Kitchen 1 6 3 0 2.20
Chuy’s Holdings 0 7 2 0 2.22

Zoe’s Kitchen currently has a consensus target price of $17.55, indicating a potential upside of 39.95%. Chuy’s Holdings has a consensus target price of $26.89, indicating a potential upside of 21.95%. Given Zoe’s Kitchen’s higher possible upside, equities analysts clearly believe Zoe’s Kitchen is more favorable than Chuy’s Holdings.

Insider & Institutional Ownership

99.8% of Chuy’s Holdings shares are held by institutional investors. 3.0% of Zoe’s Kitchen shares are held by insiders. Comparatively, 3.3% of Chuy’s Holdings shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Chuy’s Holdings beats Zoe’s Kitchen on 10 of the 13 factors compared between the two stocks.

About Zoe’s Kitchen

Zoe’s Kitchen, Inc. develops and operates fast-casual restaurants serving a menu of fresh, wholesome, Mediterranean-inspired dishes delivered with Southern hospitality. The Company’s menu offers meals made from scratch using produce, proteins and other ingredients, including its appetizers, soups, salads and kabobs. Its food, including both hot and cold items, is suited for catering to a range of business and social occasions. It caters to a range of dietary needs by offering vegetarian, vegan, gluten-free and its calorie conscious, Simply 500 menu selections. Its party packs serve groups of approximately 10 and are each filled with their own combination of fresh fruits, veggies, proteins and grains. The Company serves dishes for various occasions, such as Guilt-Free Girls Night, Game Day Goodies, Shower Sensations and Kids’ Party Pack. As of December 26, 2016, it had operated 201 Company-owned restaurants and three franchise restaurants in 20 states across the United States.

About Chuy’s Holdings

Chuy’s Holdings, Inc. operates Chuy’s, a restaurant concept offering a distinct menu of authentic, freshly prepared Mexican and Tex-Mex inspired food. As of December 25, 2016, the Company operated 80 Chuy’s restaurants across 16 states. The Company offers the same menu during lunch and dinner, which includes enchiladas, fajitas, tacos, burritos, combination platters and daily specials, complemented by a range of appetizers, soups and salads. Each of the Company’s restaurants offers a range of homemade sauces, including the signature Hatch green chile and creamy jalapeno sauces. The Company also offers a full-service bar in all of its restaurants providing its customers a range of beverage offerings, featuring a selection of specialty cocktails including its signature on-the-rocks margaritas made with fresh, hand-squeezed lime juice, and the Texas Martini, a made-to-order, hand-shaken cocktail served with jalapeno-stuffed olives.

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