Rocky Mountain Chocolate Factory (NASDAQ:RMCF – Get Free Report) and Cheesecake Factory (NASDAQ:CAKE – Get Free Report) are both retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, analyst recommendations, valuation, risk and profitability.
Analyst Recommendations
This is a breakdown of current recommendations for Rocky Mountain Chocolate Factory and Cheesecake Factory, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Rocky Mountain Chocolate Factory | 1 | 0 | 0 | 0 | 1.00 |
| Cheesecake Factory | 4 | 5 | 10 | 0 | 2.32 |
Cheesecake Factory has a consensus price target of $59.18, suggesting a potential upside of 13.76%. Given Cheesecake Factory’s stronger consensus rating and higher probable upside, analysts plainly believe Cheesecake Factory is more favorable than Rocky Mountain Chocolate Factory.
Profitability
| Net Margins | Return on Equity | Return on Assets | |
| Rocky Mountain Chocolate Factory | -15.77% | -63.75% | -22.21% |
| Cheesecake Factory | 4.33% | 46.35% | 5.94% |
Institutional & Insider Ownership
50.3% of Rocky Mountain Chocolate Factory shares are held by institutional investors. Comparatively, 94.5% of Cheesecake Factory shares are held by institutional investors. 42.2% of Rocky Mountain Chocolate Factory shares are held by company insiders. Comparatively, 8.4% of Cheesecake Factory shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares Rocky Mountain Chocolate Factory and Cheesecake Factory”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Rocky Mountain Chocolate Factory | $29.58 million | 0.42 | -$6.12 million | ($0.61) | -2.59 |
| Cheesecake Factory | $3.71 billion | 0.70 | $156.78 million | $3.30 | 15.76 |
Cheesecake Factory has higher revenue and earnings than Rocky Mountain Chocolate Factory. Rocky Mountain Chocolate Factory is trading at a lower price-to-earnings ratio than Cheesecake Factory, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Rocky Mountain Chocolate Factory has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, Cheesecake Factory has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500.
Summary
Cheesecake Factory beats Rocky Mountain Chocolate Factory on 13 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 Cheesecake Factory
The Cheesecake Factory Incorporated operates and licenses restaurants in the United States and Canada. The company operates bakeries that produce cheesecakes and other baked products for its restaurants, international licensees, third-party bakery customers, external foodservice operators, retailers, and distributors. It operates restaurants under the brands comprising The Cheesecake Factory, North Italia, Flower Child, Fox Restaurant Concepts. The Cheesecake Factory Incorporated was founded in 1972 and is headquartered in Calabasas, California.
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