Financial Analysis: Brinker International (NYSE:EAT) & FAT Brands (NASDAQ:FATBB)

Brinker International (NYSE:EAT – Get Rating) and FAT Brands (NASDAQ:FATBB – Get Rating) are both small-cap retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, risk, valuation, institutional ownership, earnings, analyst recommendations and profitability.

Profitability

This table compares Brinker International and FAT Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brinker International	1.87%	-35.47%	4.07%
FAT Brands	-30.99%	N/A	-6.56%

Institutional and Insider Ownership

0.7% of FAT Brands shares are owned by institutional investors. 2.4% of Brinker International shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Brinker International and FAT Brands, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brinker International	2	7	6	0	2.27
FAT Brands	0	0	0	0	N/A

Brinker International presently has a consensus target price of $37.18, indicating a potential upside of 5.55%. Given Brinker International’s higher probable upside, equities analysts clearly believe Brinker International is more favorable than FAT Brands.

Risk & Volatility

Brinker International has a beta of 2.35, meaning that its share price is 135% more volatile than the S&P 500. Comparatively, FAT Brands has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500.

Valuation and Earnings

This table compares Brinker International and FAT Brands’ revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brinker International	$3.80 billion	0.41	$117.60 million	$1.64	21.48
FAT Brands	$407.22 million	0.26	-$126.19 million	($7.66)	-0.85

Brinker International has higher revenue and earnings than FAT Brands. FAT Brands is trading at a lower price-to-earnings ratio than Brinker International, indicating that it is currently the more affordable of the two stocks.

Summary

Brinker International beats FAT Brands on 11 of the 13 factors compared between the two stocks.

About Brinker International

(Get Rating)

Brinker International, Inc. engages in owning, developing, and franchising Chili’s Grill and Bar and Maggiano’s Little Italy restaurant brands. It operates through the following segments: Chili’s, and Maggiano’s. The Chili’s segment includes the results of company-owned Chili’s restaurants in the U.S. and Canada as well as the results from domestic and international franchise business. The Maggiano’s segment comprises the results of company-owned Maggiano’s restaurants. The company was founded by Larry Lavine on March 13, 1975 and is headquartered in Dallas, TX.

About FAT Brands

(Get Rating)

FAT Brands Inc., a multi-brand franchising company, acquires, develops, and manages quick service, fast casual, casual dining, and polished casual dining restaurant concepts worldwide. As of October 5, 2022, it owned seventeen restaurant brands, including Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli's, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo's Cafe and Buffalo's Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean, and Ponderosa Steakhouse/Bonanza Steakhouse, as well as franchises and owns approximately 2,300 locations. The company was incorporated in 2017 and is headquartered in Beverly Hills, California. FAT Brands Inc. operates as a subsidiary of Fog Cutter Holdings, LLC.