Main Street Capital (NYSE:MAIN) and Zoe’s Kitchen (NYSE:ZOES) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, dividends, institutional ownership and risk.
This table compares Main Street Capital and Zoe’s Kitchen’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
|Main Street Capital
This is a summary of recent ratings for Main Street Capital and Zoe’s Kitchen, as reported by MarketBeat.com.
||Strong Buy Ratings
|Main Street Capital
Main Street Capital presently has a consensus price target of $38.80, suggesting a potential upside of 2.81%. Zoe’s Kitchen has a consensus price target of $10.92, suggesting a potential upside of ∞. Given Zoe’s Kitchen’s higher possible upside, analysts clearly believe Zoe’s Kitchen is more favorable than Main Street Capital.
Volatility and Risk
Main Street Capital has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, Zoe’s Kitchen has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500.
Valuation & Earnings
This table compares Main Street Capital and Zoe’s Kitchen’s gross revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
|Main Street Capital
Main Street Capital has higher earnings, but lower revenue than Zoe’s Kitchen. Zoe’s Kitchen is trading at a lower price-to-earnings ratio than Main Street Capital, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
22.9% of Main Street Capital shares are owned by institutional investors. Comparatively, 72.8% of Zoe’s Kitchen shares are owned by institutional investors. 5.3% of Main Street Capital shares are owned by insiders. Comparatively, 4.0% of Zoe’s Kitchen shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Main Street Capital pays an annual dividend of $2.34 per share and has a dividend yield of 6.2%. Zoe’s Kitchen does not pay a dividend. Main Street Capital pays out 90.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Main Street Capital has increased its dividend for 8 consecutive years.
Main Street Capital beats Zoe’s Kitchen on 12 of the 16 factors compared between the two stocks.
Main Street Capital Company Profile
Main Street Capital Corporation is a business development company specializing in long- term equity and debt investments in small and lower middle market companies. The firm focuses on investments in, subordinated loans, private equity, venture debt, mezzanine investments, mature, mid venture, industry consolidation, later stage, late venture, emerging growth, management buyouts, change of control transactions, ownership transitions, recapitalizations, strategic acquisitions, refinancing, business expansion capital, growth financings, family estate planning, and other growth initiatives primarily for later stage businesses. It invests in consumer discretionary, consumer staples, energy, healthcare, industrials, information technology, manufacturing, media, materials, telecommunication services, and utilities sectors. It does not seek to invest in start-up companies or companies with speculative business plans. It seeks to invest in traditional or basic businesses. The firm primarily invests in companies based in the Southern, South Central, and Southwestern regions of the United States but also considers other domestic investment opportunities. It typically invests between $2 million and $75 million in equity and $5 million to $50 million in debt, revenue between $10 million and $150 million, enterprise value between $3 million and $50 million, and EBITDA between $1 million and $20 million. The firm seeks to charge a fixed interest rate between 12 percent and 14 percent, payable in cash, in case of its mezzanine loan investments. The firm typically invests in the form of term debt with equity participation and/or direct equity investments. It prefers to maintain fully diluted minority and majority equity positions in its portfolio companies of 5 percent to 50 percent, and may have controlling interests in some instances. The firm also co-invests with other investment firms. It seeks to exit its debt investments through the repayment of the investment from internally generated cash flow and/or refinancing within a period of three to seven years. It participates in warrants, PIK (Payment in Kind) interest, convertible securities, junior secured or unsecured, senior secured debt, unitranche debt, equity related, common equity, and preferred equity. Main Street Capital Corporation was incorporated on March 9, 2007 and is based at Houston, Texas.
Zoe’s Kitchen Company Profile
Zoe's Kitchen, Inc., through its subsidiaries, develops and operates a chain of fast-casual restaurants. It operates a range of restaurant formats, including in-line, end-cap, and free-standing restaurants. As of February 22, 2018, the company operated owned and franchised 249 restaurants in 20 states of the United States. Zoe's Kitchen, Inc. was founded in 1995 and is based in Plano, Texas.
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