Analyzing Good Times Restaurants (GTIM) and Starbucks (SBUX)

Good Times Restaurants (NASDAQ: GTIM) and Starbucks (NASDAQ:SBUX) are both retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Valuation and Earnings

This table compares Good Times Restaurants and Starbucks’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Good Times Restaurants $79.08 million 0.41 -$1.32 million ($0.18) -14.44
Starbucks $22.39 billion 3.72 $2.88 billion $1.97 29.75

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Good Times Restaurants and Starbucks, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Good Times Restaurants 0 0 1 0 3.00
Starbucks 0 10 18 1 2.69

Good Times Restaurants currently has a consensus price target of $6.00, suggesting a potential upside of 130.77%. Starbucks has a consensus price target of $63.25, suggesting a potential upside of 7.92%. Given Good Times Restaurants’ stronger consensus rating and higher possible upside, analysts plainly believe Good Times Restaurants is more favorable than Starbucks.

Risk & Volatility

Good Times Restaurants has a beta of 0.79, indicating that its share price is 21% less volatile than the S&P 500. Comparatively, Starbucks has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Good Times Restaurants -2.85% -6.05% -4.47%
Starbucks 12.89% 53.34% 21.21%

Insider & Institutional Ownership

32.4% of Good Times Restaurants shares are owned by institutional investors. Comparatively, 71.1% of Starbucks shares are owned by institutional investors. 8.4% of Good Times Restaurants shares are owned by insiders. Comparatively, 3.4% of Starbucks shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Starbucks pays an annual dividend of $1.20 per share and has a dividend yield of 2.0%. Good Times Restaurants does not pay a dividend. Starbucks pays out 60.9% of its earnings in the form of a dividend.

Summary

Starbucks beats Good Times Restaurants on 11 of the 16 factors compared between the two stocks.

Good Times Restaurants Company Profile

Good Times Restaurants Inc. operates and franchises Good Times Burgers & Frozen Custard (Good Times) restaurants and Bad Daddy’s Burger Bar concept (Bad Daddy’s). The Company operates through two segments: Good Times Burgers and Frozen Custard restaurants, and Bad Daddy’s Burger Bar restaurants. Good Times is a quick service restaurant concept. The menu of a Good Times restaurant includes hamburgers, cheeseburgers, chicken sandwiches, French fries, onion rings, soft drinks and frozen custard products. Its breakfast menu includes breakfast burritos, orange juice and coffee. Bad Daddy’s operates in the burger casual dining sector and is chef driven, full service, full bar concept. Its menu consists of burgers, salads, sandwiches and appetizers. Its bar focuses on local, craft microbrew beers and specialty cocktails. The Company operates through its subsidiaries, Good Times Drive Thru, Inc., BD of Colorado, LLC, Bad Daddy’s Franchise Development, LLC and Bad Daddy’s International, LLC.

Starbucks Company Profile

Starbucks Corporation (Starbucks) is a roaster, marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries. The Company operates through four segments: Americas, which is inclusive of the United States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and Africa (EMEA), and Channel Development. The Company’s Americas, CAP, and EMEA segments include both company-operated and licensed stores. Its Channel Development segment includes roasted whole bean and ground coffees, Tazo teas, Starbucks- and Tazo-branded single-serve products, a range of ready-to-drink beverages, such as Frappuccino, Starbucks Doubleshot and Starbucks Refreshers beverages and other branded products sold across the world through channels, such as grocery stores, warehouse clubs, specialty retailers, convenience stores and the United States foodservice accounts.

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