Head-To-Head Analysis: Papa Murphy’s (FRSH) vs. CEC Entertainment (CEC)

Papa Murphy’s (NASDAQ: FRSH) and CEC Entertainment (NYSE:CEC) 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.

Insider & Institutional Ownership

32.3% of Papa Murphy’s shares are held by institutional investors. 3.1% of Papa Murphy’s 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.

Profitability

This table compares Papa Murphy’s and CEC Entertainment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Papa Murphy’s -9.72% 5.05% 1.83%
CEC Entertainment N/A N/A N/A

Valuation & Earnings

This table compares Papa Murphy’s and CEC Entertainment’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Papa Murphy’s $126.88 million 0.83 $2.64 million ($0.71) -8.79
CEC Entertainment N/A N/A N/A $2.73 N/A

Papa Murphy’s has higher revenue and earnings than CEC Entertainment. Papa Murphy’s is trading at a lower price-to-earnings ratio than CEC Entertainment, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Papa Murphy’s and CEC Entertainment, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Papa Murphy’s 0 2 0 0 2.00
CEC Entertainment 0 0 0 0 N/A

Papa Murphy’s currently has a consensus target price of $4.75, indicating a potential downside of 23.88%.

Volatility and Risk

Papa Murphy’s has a beta of 0.14, suggesting that its stock price is 86% less volatile than the S&P 500. Comparatively, CEC Entertainment has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500.

Summary

Papa Murphy’s beats CEC Entertainment on 5 of the 8 factors compared between the two stocks.

Papa Murphy’s Company Profile

Papa Murphy’s Holdings, Inc. is a holding company. The Company, together with its subsidiaries, is a franchisor and operator of the Take ‘N’ Bake pizza chain in the United States. The Company franchises the right to operate Take ‘N’ Bake pizza franchises and operates Take ‘N’ Bake pizza stores owned by the Company. The Company operates through three segments: Domestic Company Stores, Domestic Franchise and International. Its Domestic Franchise segment consists of its domestic franchised stores, which represent its system-wide stores and derives its revenues from franchise and development fees and the collection of franchise royalties. The Domestic Company Stores segment consists of its Company-owned stores in the United States and derives its revenues from retail sales of pizza and side items to the general public. Its International segment consists of its stores outside of the United States, all of which are franchised and derives its revenues from franchise and development fees.

CEC Entertainment Company Profile

CEC Entertainment, Inc. is engaged in the family dining and entertainment center business. The Company develops, operates and franchises family dining and entertainment centers under the name Chuck E. Cheese’s. Chuck E. Cheese’s stores feature musical and comic entertainment by robotic and animated characters, arcade-style and skill-oriented games, video games, rides and other activities. All of its stores offer dining selections consisting of a range of beverages, pizzas, sandwiches, appetizers, a salad bar and desserts. As of January 1, 2012, the Company and its franchisees operated a total of 556 Chuck E. Cheese’s stores. As of January 1, 2012, it operated 507 Company-owned Chuck E. Cheese’s stores located in 44 states and Canada and its franchisees operated a total of 49 stores located in 15 states, Puerto Rico, Guam, Guatemala, Chile, Saudi Arabia and the United Arab Emirates. In February 2014, Apollo Global Management, LLC completed the acquisition of CEC Entertainment Inc.

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