Sonic Corp. (NASDAQ: SONC) and Noodles & (NASDAQ:NDLS) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, earnings, profitabiliy, risk and dividends.
Dividends
Sonic Corp. pays an annual dividend of $0.56 per share and has a dividend yield of 2.3%. Noodles & does not pay a dividend. Sonic Corp. pays out 37.3% of its earnings in the form of a dividend.
Valuation and Earnings
This table compares Sonic Corp. and Noodles &’s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Sonic Corp. | $515.82 million | 2.01 | $158.68 million | $1.50 | 16.49 |
| Noodles & | $490.20 million | 0.33 | $11.41 million | ($3.48) | -1.15 |
Sonic Corp. has higher revenue and earnings than Noodles &. Noodles & is trading at a lower price-to-earnings ratio than Sonic Corp., indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
97.5% of Sonic Corp. shares are held by institutional investors. Comparatively, 55.1% of Noodles & shares are held by institutional investors. 6.2% of Sonic Corp. shares are held by company insiders. Comparatively, 52.7% of Noodles & shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Risk and Volatility
Sonic Corp. has a beta of 1.74, suggesting that its stock price is 74% more volatile than the S&P 500. Comparatively, Noodles & has a beta of -0.57, suggesting that its stock price is 157% less volatile than the S&P 500.
Profitability
This table compares Sonic Corp. and Noodles &’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Sonic Corp. | 13.23% | -44.21% | 9.71% |
| Noodles & | -19.61% | -10.55% | -2.49% |
Analyst Recommendations
This is a summary of recent ratings and target prices for Sonic Corp. and Noodles &, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sonic Corp. | 2 | 7 | 3 | 0 | 2.08 |
| Noodles & | 1 | 6 | 1 | 0 | 2.00 |
Sonic Corp. presently has a consensus price target of $27.45, indicating a potential upside of 10.97%. Noodles & has a consensus price target of $5.36, indicating a potential upside of 33.93%. Given Noodles &’s higher possible upside, analysts plainly believe Noodles & is more favorable than Sonic Corp..
Summary
Sonic Corp. beats Noodles & on 11 of the 15 factors compared between the two stocks.
Sonic Corp. Company Profile
Sonic Corp. operates and franchises the chain of drive-thru restaurants (Sonic Drive-Ins) in the United States. As of August 31, 2016, 3,557 Sonic Drive-Ins were in operation from coast to coast in 45 states, consisting of 345 Company drive-thrus and 3,212 franchise drive-thrus. As of August 31, 2016, its restaurant design and construction consisted of a kitchen housed in a one-story building, which was approximately 1,500 square feet, flanked by canopy-covered rows of 16 to 24 parking spaces, with each space having its own payment terminal, intercom speaker system and menu board. At a Sonic Drive-In, a customer drives into one of the parking spaces, orders through the intercom speaker system and has the food delivered by a carhop and Sonic Drive-Ins also include a drive-thru lane and patio seating to provide customers with alternative dining options. Its food items include specialty drinks, such as cherry limeades and slushes, ice cream desserts and chicken sandwiches and hamburgers.
Noodles & Company Profile
Noodles & Company develops and operates fast casual restaurants. The Company’s menu includes a range of cooked-to-order dishes, including noodles and pasta, soups, salads, sandwiches and appetizers. The Company has approximately 490 restaurants, including 420 Company-owned and 70 franchised locations, across 40 states, the District of Columbia and one Canadian province. The Company offers over 30 globally inspired Asian, Mediterranean and American dishes together on a single menu. The Company offers approximately 10 fresh vegetables and six proteins, including marinated steak, naturally raised pork, chicken, meatballs, shrimp and organic tofu. The Company offers Kids Meals, which includes sides, such as broccoli, carrots, fruit, applesauce and a portion of its housemade rice crispy treat. The Company’s restaurants’ locations include Arizona, California, Colorado, Delaware, New York, North Dakota, Ohio, Texas, Utah, Virginia, Washington and Wisconsin.
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