Head-To-Head Analysis: ONE Group Hospitality (NASDAQ:STKS) vs. Rave Restaurant Group (NASDAQ:RAVE)

Rave Restaurant Group (NASDAQ:RAVE) and ONE Group Hospitality (NASDAQ:STKS) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, risk, earnings and dividends.

Valuation and Earnings

This table compares Rave Restaurant Group and ONE Group Hospitality”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rave Restaurant Group	$12.24 million	4.15	$2.47 million	$0.19	18.79
ONE Group Hospitality	$673.34 million	0.11	-$15.82 million	($1.50)	-1.65

Rave Restaurant Group has higher earnings, but lower revenue than ONE Group Hospitality. ONE Group Hospitality is trading at a lower price-to-earnings ratio than Rave Restaurant Group, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Rave Restaurant Group has a beta of 0.32, indicating that its share price is 68% less volatile than the S&P 500. Comparatively, ONE Group Hospitality has a beta of 1.98, indicating that its share price is 98% more volatile than the S&P 500.

Profitability

This table compares Rave Restaurant Group and ONE Group Hospitality’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rave Restaurant Group	22.34%	20.59%	17.11%
ONE Group Hospitality	-1.91%	69.82%	2.77%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Rave Restaurant Group and ONE Group Hospitality, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rave Restaurant Group	0	0	0	0	0.00
ONE Group Hospitality	1	2	2	1	2.50

ONE Group Hospitality has a consensus price target of $4.63, suggesting a potential upside of 87.25%. Given ONE Group Hospitality’s stronger consensus rating and higher possible upside, analysts clearly believe ONE Group Hospitality is more favorable than Rave Restaurant Group.

Institutional & Insider Ownership

15.1% of Rave Restaurant Group shares are held by institutional investors. Comparatively, 29.1% of ONE Group Hospitality shares are held by institutional investors. 27.7% of Rave Restaurant Group shares are held by insiders. Comparatively, 25.1% of ONE Group Hospitality shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

ONE Group Hospitality beats Rave Restaurant Group on 8 of the 15 factors compared between the two stocks.

About Rave Restaurant Group

Rave Restaurant Group, Inc., together with its subsidiaries, engages in the operation and franchising of pizza buffet, delivery/carry-out (delco), and express restaurants under the Pizza Inn and Pie Five trademarks in the United States and internationally. The company operates through three segments: Pizza Inn Franchising, Pie Five Franchising, and Company-Owned Restaurants. Its buffet restaurants are located in free standing buildings or strip centers in retail developments that offer dine-in, carryout, and catering services, as well as delivery services. The company’s delco restaurants provide delivery and carryout services and are located in shopping centers or other in-line retail developments. Its Express restaurants serve customers through various non-traditional points of sale and are located in convenience stores, food courts, college campuses, airport terminals, travel plazas, athletic facilities, or other commercial facilities. The company’s Pizza Inn Express restaurants serve customers through a non-traditional, licensed, pizza-only model called Pizza Inn Express, located at production-oriented facilities. In addition, it operates and franchises fast casual restaurants under the Pie Five Pizza Company or Pie Five trademarks. The company was formerly known as Pizza Inn Holdings, Inc. and changed its name to Rave Restaurant Group, Inc. in January 2015. Rave Restaurant Group, Inc. was founded in 1958 and is based in The Colony, Texas.

About ONE Group Hospitality

The ONE Group Hospitality, Inc., a restaurant company, develops, owns, operates, manages, and licenses restaurants and lounges worldwide. It operates through STK, Kona Grill, and ONE Hospitality segments. The company also provides turn-key food and beverage services for hospitality venues, including hotels, casinos, and other locations. Its hospitality food and beverage solutions include developing, managing, and operating restaurants, bars, rooftops, pools, banqueting, catering, private dining rooms, room service, and mini bars; and offers hospitality advisory and consulting services. The company operates restaurants primarily under the STK and Kona Grill brands. The ONE Group Hospitality, Inc. was founded in 2004 and is based in Denver, Colorado.