Luby’s (NYSE: LUB) and El Pollo Loco (NASDAQ:LOCO) are both small-cap retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, profitability and earnings.
Institutional & Insider Ownership
41.2% of Luby’s shares are held by institutional investors. Comparatively, 78.1% of El Pollo Loco shares are held by institutional investors. 35.2% of Luby’s shares are held by company insiders. Comparatively, 45.9% of El Pollo Loco shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Risk and Volatility
Luby’s has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500. Comparatively, El Pollo Loco has a beta of 0.31, suggesting that its share price is 69% less volatile than the S&P 500.
This is a breakdown of current recommendations and price targets for Luby’s and El Pollo Loco, as reported by MarketBeat.com.
||Strong Buy Ratings
|El Pollo Loco
El Pollo Loco has a consensus price target of $13.00, suggesting a potential upside of 22.64%. Given El Pollo Loco’s higher probable upside, analysts clearly believe El Pollo Loco is more favorable than Luby’s.
Valuation and Earnings
This table compares Luby’s and El Pollo Loco’s gross revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
|El Pollo Loco
El Pollo Loco has higher revenue and earnings than Luby’s. Luby’s 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.
This table compares Luby’s and El Pollo Loco’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
|El Pollo Loco
El Pollo Loco beats Luby’s on 11 of the 12 factors compared between the two stocks.
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.
El Pollo Loco Company Profile
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.
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