Head-To-Head Analysis: Zoe’s Kitchen (ZOES) vs. Del Frisco’s Restaurant Group (NASDAQ:DFRG)

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Zoe’s Kitchen (NYSE:ZOES) and Del Frisco’s Restaurant Group (NASDAQ:DFRG) are both small-cap retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.

Volatility & Risk

Zoe’s Kitchen has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500. Comparatively, Del Frisco’s Restaurant Group has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Zoe’s Kitchen and Del Frisco’s Restaurant Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zoe’s Kitchen 1 6 0 0 1.86
Del Frisco’s Restaurant Group 0 3 3 0 2.50

Zoe’s Kitchen currently has a consensus price target of $12.46, indicating a potential downside of 1.90%. Del Frisco’s Restaurant Group has a consensus price target of $14.38, indicating a potential upside of 82.66%. Given Del Frisco’s Restaurant Group’s stronger consensus rating and higher probable upside, analysts plainly believe Del Frisco’s Restaurant Group is more favorable than Zoe’s Kitchen.

Earnings & Valuation

This table compares Zoe’s Kitchen and Del Frisco’s Restaurant Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zoe’s Kitchen $314.10 million 0.79 -$1.99 million ($0.10) -127.00
Del Frisco’s Restaurant Group $361.43 million 0.69 -$11.45 million $0.75 10.49

Zoe’s Kitchen has higher earnings, but lower revenue than Del Frisco’s Restaurant Group. Zoe’s Kitchen is trading at a lower price-to-earnings ratio than Del Frisco’s Restaurant Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Zoe’s Kitchen and Del Frisco’s Restaurant Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zoe’s Kitchen -7.50% -5.77% -3.07%
Del Frisco’s Restaurant Group -4.81% 7.14% 4.06%

Insider & Institutional Ownership

83.6% of Zoe’s Kitchen shares are owned by institutional investors. Comparatively, 63.4% of Del Frisco’s Restaurant Group shares are owned by institutional investors. 4.0% of Zoe’s Kitchen shares are owned by insiders. Comparatively, 3.2% of Del Frisco’s Restaurant Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Del Frisco’s Restaurant Group beats Zoe’s Kitchen on 10 of the 14 factors compared between the two stocks.

About Zoe’s Kitchen

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.

About Del Frisco’s Restaurant Group

Del Frisco's Restaurant Group, Inc. develops, owns, and operates restaurants in the United States. It owns and operates restaurants under the Del Frisco's Double Eagle Steak House, Sullivan's Steakhouse, Del Frisco's Grille, Barcelona Wine Bar, and bartaco brand names. The company offers steaks, as well as other menu selections, such as chops, fresh seafood, tapas, street food, and wines and cocktails. As of September 24, 2018, it operated 71 restaurants in 18 states and the District of Columbia. The company was founded in 1981 and is headquartered in Irving, Texas.

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