Critical Review: Shake Shack (NYSE:SHAK) and GEN Restaurant Group (NASDAQ:GENK)

Shake Shack (NYSE:SHAK) and GEN Restaurant Group (NASDAQ:GENK) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, institutional ownership, profitability and risk.

Earnings & Valuation

This table compares Shake Shack and GEN Restaurant Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shake Shack	$1.45 billion	2.40	$45.72 million	$1.09	74.64
GEN Restaurant Group	$208.38 million	0.30	$590,000.00	($0.26)	-7.31

Shake Shack has higher revenue and earnings than GEN Restaurant Group. GEN Restaurant Group is trading at a lower price-to-earnings ratio than Shake Shack, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Shake Shack and GEN Restaurant Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shake Shack	3.16%	11.08%	3.23%
GEN Restaurant Group	-0.61%	0.51%	0.09%

Institutional and Insider Ownership

86.1% of Shake Shack shares are owned by institutional investors. Comparatively, 10.2% of GEN Restaurant Group shares are owned by institutional investors. 8.5% of Shake Shack shares are owned by company insiders. Comparatively, 59.1% of GEN Restaurant Group shares are owned 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 summary of current ratings for Shake Shack and GEN Restaurant Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shake Shack	1	14	10	1	2.42
GEN Restaurant Group	1	0	2	0	2.33

Shake Shack currently has a consensus price target of $116.64, indicating a potential upside of 43.37%. GEN Restaurant Group has a consensus price target of $4.50, indicating a potential upside of 136.84%. Given GEN Restaurant Group’s higher probable upside, analysts plainly believe GEN Restaurant Group is more favorable than Shake Shack.

Risk & Volatility

Shake Shack has a beta of 1.73, suggesting that its stock price is 73% more volatile than the S&P 500. Comparatively, GEN Restaurant Group has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500.

Summary

Shake Shack beats GEN Restaurant Group on 13 of the 15 factors compared between the two stocks.

About Shake Shack

Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally. Its Shacks offers hamburgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine, and other products. The company was founded in 2001 and is headquartered in New York, New York.

About GEN Restaurant Group

GEN Restaurant Group, Inc. operates restaurants in California, Arizona, Hawaii, Nevada, Texas, New York, and Florida. It offers meats, poultry, and seafood. The company was founded in 2011 and is based in Cerritos, California.