Papa Murphy's (FRSH) & Wingstop (WING) Critical Survey

Papa Murphy's (NASDAQ: FRSH) and Wingstop (NASDAQ:WING) 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 earnings, analyst recommendations, profitability, risk, valuation, institutional ownership and dividends.

Earnings & Valuation

This table compares Papa Murphy's and Wingstop’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Papa Murphy's $126.88 million 0.77 $2.64 million ($0.71) -8.08
Wingstop $91.36 million 14.35 $15.43 million $0.72 62.61

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

Profitability

This table compares Papa Murphy's and Wingstop’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%
Wingstop 20.70% -32.39% 18.34%

Insider and Institutional Ownership

32.3% of Papa Murphy's shares are held by institutional investors. 3.1% of Papa Murphy's shares are held by company insiders. Comparatively, 1.8% of Wingstop shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Wingstop pays an annual dividend of $0.14 per share and has a dividend yield of 0.3%. Papa Murphy's does not pay a dividend. Wingstop pays out 19.4% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current recommendations and price targets for Papa Murphy's and Wingstop, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Papa Murphy's 0 2 0 0 2.00
Wingstop 1 5 7 0 2.46

Papa Murphy's currently has a consensus price target of $4.75, indicating a potential downside of 17.25%. Wingstop has a consensus price target of $39.82, indicating a potential downside of 11.67%. Given Wingstop’s stronger consensus rating and higher probable upside, analysts clearly believe Wingstop is more favorable than Papa Murphy's.

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, Wingstop has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500.

Summary

Wingstop beats Papa Murphy's on 11 of the 16 factors compared between the two stocks.

About Papa Murphy's

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.

About Wingstop

Wingstop Inc. is franchisor and operator of restaurants that specializes in cooked-to-order, hand-sauced and tossed chicken wings. The Company operates through two segments: Franchise and Company. As of December 31, 2016, the Company offers its guests 11 flavors on bone-in and boneless chicken wings paired with hand-cut, seasoned fries and sides. It is a casual chicken wings-focused restaurant chain with various concepts, which include wings as add-on menu items or focus on wings in a bar or sports-centric setting. The flavors include Atomic, Mango Habanero, Cajun, Original Hot, Louisiana Rub, Mild, Hickory Smoked BBQ, Lemon Pepper, Garlic Parmesan, Hawaiian and Teriyaki. It offers various order options, including eat-in, to go, individual, combo meals and family packs. The Company maintains Website hosting, and manages the development and maintenance of the mobile Wingstop application. It markets Wingstop products, services and restaurants through the Website, www.wingstop.com.

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