Rocky Mountain Chocolate Factory (NASDAQ:RMCF) & FAT Brands (NASDAQ:FAT) Head-To-Head Review

Rocky Mountain Chocolate Factory (NASDAQ:RMCF) and FAT Brands (NASDAQ:FAT) 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 dividends, risk, analyst recommendations, earnings, profitability, institutional ownership and valuation.

Earnings & Valuation

This table compares Rocky Mountain Chocolate Factory and FAT Brands”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rocky Mountain Chocolate Factory	$29.58 million	0.39	-$6.12 million	($0.63)	-2.35
FAT Brands	$592.65 million	0.06	-$189.85 million	($12.70)	-0.16

Rocky Mountain Chocolate Factory has higher earnings, but lower revenue than FAT Brands. Rocky Mountain Chocolate Factory is trading at a lower price-to-earnings ratio than FAT Brands, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Rocky Mountain Chocolate Factory has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500. Comparatively, FAT Brands has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500.

Insider & Institutional Ownership

50.3% of Rocky Mountain Chocolate Factory shares are held by institutional investors. Comparatively, 6.9% of FAT Brands shares are held by institutional investors. 42.2% of Rocky Mountain Chocolate Factory shares are held by company insiders. Comparatively, 14.4% of FAT Brands shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Rocky Mountain Chocolate Factory and FAT Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rocky Mountain Chocolate Factory	-16.21%	-56.22%	-22.79%
FAT Brands	-36.77%	N/A	-16.49%

Analyst Ratings

This is a breakdown of recent recommendations for Rocky Mountain Chocolate Factory and FAT Brands, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rocky Mountain Chocolate Factory	0	0	0	0	0.00
FAT Brands	0	0	1	0	3.00

FAT Brands has a consensus target price of $10.00, indicating a potential upside of 392.61%. Given FAT Brands’ stronger consensus rating and higher possible upside, analysts plainly believe FAT Brands is more favorable than Rocky Mountain Chocolate Factory.

Summary

FAT Brands beats Rocky Mountain Chocolate Factory on 8 of the 14 factors compared between the two stocks.

About Rocky Mountain Chocolate Factory

Rocky Mountain Chocolate Factory, Inc., together with its subsidiaries, operates as a confectionery franchisor, manufacturer, and retail operator. It operates through Franchising, Manufacturing, Retail Stores, and Other segments. The company produces approximately 400 chocolate candies and other confectionery products, including clusters, caramels, creams, toffees, mints, and truffles; and offers 15 varieties of caramel apples and other products that are prepared in individual stores, as well as provides ice cream, coffee, and other sundries. Rocky Mountain Chocolate Factory, Inc. was founded in 1981 and is headquartered in Durango, Colorado.

About FAT Brands

FAT Brands Inc., a multi-brand restaurant franchising company, acquires, develops, markets, and manages quick service, fast casual, casual dining, and polished casual dining restaurant concepts worldwide. It owns restaurant brands, including Round Table Pizza, Marble Slab Creamery, Great American Cookies, Hot Dog on a Stick, Pretzelmaker, Fazoli's, Fatburger, Johnny Rockets, Elevation Burger, Yalla Mediterranean, Buffalo's Cafe and Buffalo's Express, Hurricane Grill & Wings, Ponderosa Steakhouse/Bonanza Steakhouse, Native Grill & Wings, Smokey Bones, and Twin Peaks. The company was incorporated in 2017 and is headquartered in Beverly Hills, California. FAT Brands Inc. is a subsidiary of Fog Cutter Holdings, LLC.