Zoe's Kitchen (NYSE:ZOES) and Good Times Restaurants (GTIM) Financial Review

Zoe's Kitchen (NYSE: ZOES) and Good Times Restaurants (NASDAQ:GTIM) are both small-cap cyclical consumer goods & services companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, profitability, analyst recommendations, dividends and risk.

Insider & Institutional Ownership

96.6% of Zoe's Kitchen shares are held by institutional investors. Comparatively, 32.3% of Good Times Restaurants shares are held by institutional investors. 3.0% of Zoe's Kitchen shares are held by company insiders. Comparatively, 8.4% of Good Times Restaurants shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Zoe's Kitchen and Good Times Restaurants, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zoe's Kitchen 1 5 3 0 2.22
Good Times Restaurants 0 0 1 0 3.00

Zoe's Kitchen presently has a consensus target price of $16.72, suggesting a potential upside of 20.83%. Good Times Restaurants has a consensus target price of $6.00, suggesting a potential upside of 135.29%. Given Good Times Restaurants’ stronger consensus rating and higher probable upside, analysts clearly believe Good Times Restaurants is more favorable than Zoe's Kitchen.

Risk & Volatility

Zoe's Kitchen has a beta of 0.33, suggesting that its stock price is 67% less volatile than the S&P 500. Comparatively, Good Times Restaurants has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500.

Profitability

This table compares Zoe's Kitchen and Good Times Restaurants’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zoe's Kitchen 0.12% -0.66% -0.38%
Good Times Restaurants -2.59% -5.92% -4.17%

Valuation and Earnings

This table compares Zoe's Kitchen and Good Times Restaurants’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zoe's Kitchen $275.96 million 0.98 $1.80 million $0.02 692.00
Good Times Restaurants $79.08 million 0.40 -$2.25 million ($0.18) -14.17

Zoe's Kitchen has higher revenue and earnings than Good Times Restaurants. Good Times Restaurants is trading at a lower price-to-earnings ratio than Zoe's Kitchen, indicating that it is currently the more affordable of the two stocks.

Summary

Zoe's Kitchen beats Good Times Restaurants on 10 of the 14 factors compared between the two stocks.

Zoe's Kitchen Company Profile

Zoe’s Kitchen, Inc. develops and operates fast-casual restaurants serving a menu of fresh, wholesome, Mediterranean-inspired dishes delivered with Southern hospitality. The Company’s menu offers meals made from scratch using produce, proteins and other ingredients, including its appetizers, soups, salads and kabobs. Its food, including both hot and cold items, is suited for catering to a range of business and social occasions. It caters to a range of dietary needs by offering vegetarian, vegan, gluten-free and its calorie conscious, Simply 500 menu selections. Its party packs serve groups of approximately 10 and are each filled with their own combination of fresh fruits, veggies, proteins and grains. The Company serves dishes for various occasions, such as Guilt-Free Girls Night, Game Day Goodies, Shower Sensations and Kids’ Party Pack. As of December 26, 2016, it had operated 201 Company-owned restaurants and three franchise restaurants in 20 states across the United States.

Good Times Restaurants Company Profile

Good Times Restaurants Inc. operates and franchises Good Times Burgers & Frozen Custard (Good Times) restaurants and Bad Daddy’s Burger Bar concept (Bad Daddy’s). The Company operates through two segments: Good Times Burgers and Frozen Custard restaurants, and Bad Daddy’s Burger Bar restaurants. Good Times is a quick service restaurant concept. The menu of a Good Times restaurant includes hamburgers, cheeseburgers, chicken sandwiches, French fries, onion rings, soft drinks and frozen custard products. Its breakfast menu includes breakfast burritos, orange juice and coffee. Bad Daddy’s operates in the burger casual dining sector and is chef driven, full service, full bar concept. Its menu consists of burgers, salads, sandwiches and appetizers. Its bar focuses on local, craft microbrew beers and specialty cocktails. The Company operates through its subsidiaries, Good Times Drive Thru, Inc., BD of Colorado, LLC, Bad Daddy’s Franchise Development, LLC and Bad Daddy’s International, LLC.

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