Financial Comparison: The ONE Group Hospitality (STKS) and Luby’s (LUB)

The ONE Group Hospitality (NASDAQ: STKS) and Luby’s (NYSE:LUB) are both small-cap cyclical consumer goods & services companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
The ONE Group Hospitality -25.48% -68.30% -7.44%
Luby’s -6.19% -6.47% -4.08%

Volatility & Risk

The ONE Group Hospitality has a beta of 1.64, suggesting that its share price is 64% more volatile than the S&P 500. Comparatively, Luby’s has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500.

Institutional and Insider Ownership

14.5% of The ONE Group Hospitality shares are owned by institutional investors. Comparatively, 41.2% of Luby’s shares are owned by institutional investors. 35.9% of The ONE Group Hospitality shares are owned by insiders. Comparatively, 35.2% of Luby’s shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for The ONE Group Hospitality and Luby’s, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The ONE Group Hospitality 0 0 0 0 N/A
Luby’s 0 0 0 0 N/A

Valuation & Earnings

This table compares The ONE Group Hospitality and Luby’s’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The ONE Group Hospitality $72.41 million 0.86 -$16.68 million ($0.79) -3.13
Luby’s $376.03 million 0.22 -$23.26 million ($0.79) -3.54

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

The ONE Group Hospitality Company Profile

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.

Luby’s Company Profile

Luby’s, Inc., is a multi-branded company operating in the restaurant industry and in the contract food services industry. The Company is managed through three segments: Company-owned restaurants, franchise operations, and Culinary Contract Services (CSS). The company-owned restaurants brands are Luby’s Cafeteria, Fuddruckers, and Cheeseburger in Paradise with a couple of non-core restaurant locations under other brand names. As of August 31, 2016, the Company owned and operated 175 restaurants, with 127 in Texas and the remainder in other states. The Company offers franchises for the Fuddruckers brand. As of August 31, 2016, the number of franchised restaurants were 113. Culinary Contract Services consists of contract arrangements to manage food services for clients operating in three lines of business: healthcare, higher education, and corporate dining. As of August 31, 2016, the Company had 24 Culinary Contract Services contracts.

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