Ruth’s Hospitality Group (NASDAQ:RUTH) and Aramark (ARMK) Critical Analysis

Ruth’s Hospitality Group (NASDAQ: RUTH) and Aramark (NYSE:ARMK) are both retail/wholesale companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Earnings & Valuation

This table compares Ruth’s Hospitality Group and Aramark’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ruth’s Hospitality Group $396.96 million 1.62 $62.65 million $1.01 20.89
Aramark $14.49 billion 0.73 $1.29 billion $1.37 31.61

Aramark has higher revenue and earnings than Ruth’s Hospitality Group. Ruth’s Hospitality Group is trading at a lower price-to-earnings ratio than Aramark, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ruth’s Hospitality Group and Aramark’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ruth’s Hospitality Group 7.97% 37.86% 15.69%
Aramark 2.37% 19.29% 4.11%

Volatility and Risk

Ruth’s Hospitality Group has a beta of 0.33, indicating that its stock price is 67% less volatile than the S&P 500. Comparatively, Aramark has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500.

Institutional & Insider Ownership

81.8% of Ruth’s Hospitality Group shares are held by institutional investors. Comparatively, 94.7% of Aramark shares are held by institutional investors. 6.7% of Ruth’s Hospitality Group shares are held by insiders. Comparatively, 2.9% of Aramark shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Ruth’s Hospitality Group pays an annual dividend of $0.36 per share and has a dividend yield of 1.7%. Aramark pays an annual dividend of $0.41 per share and has a dividend yield of 0.9%. Ruth’s Hospitality Group pays out 35.6% of its earnings in the form of a dividend. Aramark pays out 29.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Aramark has increased its dividend for 2 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Ruth’s Hospitality Group and Aramark, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ruth’s Hospitality Group 0 3 1 0 2.25
Aramark 0 2 3 1 2.83

Ruth’s Hospitality Group currently has a consensus price target of $22.00, suggesting a potential upside of 4.27%. Aramark has a consensus price target of $45.17, suggesting a potential upside of 4.31%. Given Aramark’s stronger consensus rating and higher possible upside, analysts plainly believe Aramark is more favorable than Ruth’s Hospitality Group.

Summary

Aramark beats Ruth’s Hospitality Group on 12 of the 18 factors compared between the two stocks.

About Ruth’s Hospitality Group

Ruth’s Hospitality Group, Inc. develops and operates fine dining restaurants under the name, Ruth’s Chris Steak House. The Company operates through two segments. As of December 25, 2016, the Company-owned steakhouse restaurant segment included 68 Ruth’s Chris Steak House restaurants and one Ruth’s Chris Steak House restaurant, and the franchise operations segment included 81 franchisee-owned Ruth’s Chris Steak House restaurants. Its restaurant’s menu features a selection of Prime and Choice grade steaks, and other offerings. Its menu also includes lamb chops, fish, shrimp, crab, chicken and lobster. Its Ruth’s Chris restaurants offer 10 to 13 appetizer items, including Orleans-style barbequed shrimp, mushrooms stuffed with crabmeat, lobster bisque and osso bucco ravioli. It also offers a range of potatoes and vegetables as side dishes. For dessert, creme brulee, white chocolate bread pudding, cheesecake, fresh seasonal berries with sweet cream sauce and other selections are available.

About Aramark

Aramark is a global provider of food, facilities and uniform services to education, healthcare, business and industry, and sports, leisure and corrections clients. The Company operates through three segments: Food and Support Services North America (FSS North America), Food and Support Services International (FSS International), and Uniform and Career Apparel (Uniform). FSS North America and FSS International segments include food, refreshment, specialized dietary and support services, including facility maintenance and housekeeping, provided to business, educational and healthcare institutions and in sports, leisure and other facilities. The Uniform segment includes rental, sale, cleaning, maintenance and delivery of personalized uniforms and other textile items to clients in a range of industries in the United States, Puerto Rico, Japan and Canada, including manufacturing, transportation, construction, restaurants and hotels, healthcare and pharmaceutical industries.

Receive News & Ratings for Ruth's Hospitality Group Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Ruth's Hospitality Group Inc. and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply