Head-To-Head Comparison: Wendy’s (NASDAQ:WEN) and Good Times Restaurants (NASDAQ:GTIM)

Wendy’s (NASDAQ:WEN) and Good Times Restaurants (NASDAQ:GTIM) are both small-cap retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, risk, earnings, institutional ownership, analyst recommendations and valuation.

Analyst Ratings

This is a summary of current ratings and recommmendations for Wendy’s and Good Times Restaurants, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wendy’s	2	12	5	2	2.33
Good Times Restaurants	0	0	0	0	0.00

Wendy’s presently has a consensus price target of $12.97, suggesting a potential upside of 39.34%. Given Wendy’s’ stronger consensus rating and higher possible upside, equities analysts plainly believe Wendy’s is more favorable than Good Times Restaurants.

Valuation and Earnings

This table compares Wendy’s and Good Times Restaurants”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wendy’s	$2.25 billion	0.79	$194.36 million	$0.96	9.70
Good Times Restaurants	$142.32 million	0.12	$1.61 million	$0.12	13.83

Wendy’s has higher revenue and earnings than Good Times Restaurants. Wendy’s is trading at a lower price-to-earnings ratio than Good Times Restaurants, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Wendy’s and Good Times Restaurants’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wendy’s	8.63%	103.07%	3.94%
Good Times Restaurants	0.88%	5.29%	2.00%

Risk & Volatility

Wendy’s has a beta of 0.37, meaning that its share price is 63% less volatile than the S&P 500. Comparatively, Good Times Restaurants has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.

Institutional and Insider Ownership

86.0% of Wendy’s shares are owned by institutional investors. Comparatively, 12.1% of Good Times Restaurants shares are owned by institutional investors. 17.0% of Wendy’s shares are owned by company insiders. Comparatively, 26.3% of Good Times Restaurants shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Wendy’s beats Good Times Restaurants on 12 of the 15 factors compared between the two stocks.

About Wendy’s

The Wendy’s Co. engages in operating, developing, and franchising a system of quick-service restaurants. It operates through the following segments: Wendy’s U.S., Wendy’s International, and Global Real Estate and Development. The Wendy’s U.S. segment includes the operation and franchising of Wendy’s restaurants in the U.S. The Wendy’s International segment is involved in the operation and franchising of Wendy’s restaurants in countries and territories other than the U.S. The Global Real Estate and Development segment focuses on real estate activity for owned sites and sites leased from third parties. The company was founded by R. David Thomas on November 15, 1969 and is headquartered in Dublin, OH.

About Good Times Restaurants

Good Times Restaurants Inc., through its subsidiaries, engages in the restaurant business in the United States. It operates and franchises Good Times Burgers & Frozen Custard, an upscale quick-service drive-through dining restaurant; and owns, operates, franchises, and licenses Bad Daddy's Burger Bar, a full-service upscale casual dining restaurant. The company was incorporated in 1987 and is based in Golden, Colorado.