Financial Review: Nathan’s Famous (NASDAQ:NATH) vs. Ark Restaurants (NASDAQ:ARKR)

Nathan’s Famous (NASDAQ:NATH) and Ark Restaurants (NASDAQ:ARKR) are both small-cap consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, dividends, profitability, valuation, analyst recommendations and institutional ownership.

Risk and Volatility

Nathan’s Famous has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500. Comparatively, Ark Restaurants has a beta of 0.34, indicating that its stock price is 66% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Nathan’s Famous and Ark Restaurants, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nathan’s Famous	0	0	1	0	3.00
Ark Restaurants	1	0	0	0	1.00

Earnings & Valuation

This table compares Nathan’s Famous and Ark Restaurants”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nathan’s Famous	$162.06 million	2.58	$20.02 million	$4.83	21.13
Ark Restaurants	$165.75 million	0.10	-$11.47 million	($0.88)	-5.34

Nathan’s Famous has higher earnings, but lower revenue than Ark Restaurants. Ark Restaurants is trading at a lower price-to-earnings ratio than Nathan’s Famous, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Nathan’s Famous and Ark Restaurants’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nathan’s Famous	11.78%	-187.25%	34.31%
Ark Restaurants	-2.04%	-10.61%	-2.58%

Insider and Institutional Ownership

66.5% of Nathan’s Famous shares are held by institutional investors. Comparatively, 32.0% of Ark Restaurants shares are held by institutional investors. 30.7% of Nathan’s Famous shares are held by company insiders. Comparatively, 37.5% of Ark Restaurants shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Nathan’s Famous beats Ark Restaurants on 8 of the 12 factors compared between the two stocks.

About Nathan’s Famous

Nathan’s Famous, Inc. engages in the operation of franchised fast-food units. It is involved in the licensing, wholesaling, and retailing of products marketed under the Nathan’s Famous brand. The firm operates through the following business segments: Branded Product Program, Product Licensing, Restaurant Operations, and Corporate. The Branded Product Program segment markets and sells hot dog products. The Product Licensing segment is composed of royalties from licensing a variety of Nathan’s Famous products such as hotdogs, sausage and corned beef products, frozen French fries, and additional products through retail grocery channels and club stores. The Restaurant Operations segment deals with the sale of products at company-owned restaurants and fees and royalties from franchised restaurants. The Corporate segment includes administrative expenses such as executive management, finance, information technology, legal, insurance, corporate office costs, corporate incentive compensation, and compliance costs. The company was founded by Nathan Handwerker in 1916 and is headquartered in Jericho, NY.

About Ark Restaurants

Ark Restaurants Corp., through its subsidiaries, owns and operates restaurants and bars in the United States. It operates restaurants in New York City; Washington, D.C.; Las Vegas, Nevada; Atlantic City, New Jersey; Florida; and Alabama, as well as fast food concepts and catering operations. The company was incorporated in 1983 and is based in New York, New York.