Shake Shack (NYSE: SHAK) and Potbelly (NASDAQ:PBPB) are both small-cap retail/wholesale companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, institutional ownership, earnings, risk and profitability.
Risk & Volatility
Shake Shack has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500. Comparatively, Potbelly has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500.
This table compares Shake Shack and Potbelly’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Shake Shack||$358.81 million||4.22||-$320,000.00||($0.08)||-514.56|
|Potbelly||$428.11 million||0.76||-$6.95 million||($0.28)||-46.25|
Shake Shack has higher earnings, but lower revenue than Potbelly. Shake Shack is trading at a lower price-to-earnings ratio than Potbelly, indicating that it is currently the more affordable of the two stocks.
This table compares Shake Shack and Potbelly’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current ratings and recommmendations for Shake Shack and Potbelly, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Shake Shack currently has a consensus target price of $39.44, indicating a potential downside of 4.19%. Potbelly has a consensus target price of $14.33, indicating a potential upside of 10.68%. Given Potbelly’s stronger consensus rating and higher probable upside, analysts clearly believe Potbelly is more favorable than Shake Shack.
Institutional and Insider Ownership
81.8% of Shake Shack shares are held by institutional investors. Comparatively, 70.5% of Potbelly shares are held by institutional investors. 34.9% of Shake Shack shares are held by company insiders. Comparatively, 9.6% of Potbelly shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Shake Shack beats Potbelly on 9 of the 14 factors compared between the two stocks.
About Shake Shack
Shake Shack Inc. operates roadside burger stands. The Company serves an American menu of burgers, hot dogs, crispy chicken, frozen custard, crinkle cut fries, shakes, beer and wine, among others. The Company’s signature items are its all-natural, hormone and antibiotic-free burgers, hot dogs, crispy chicken, crinkle cut fries, shakes and frozen custard. Its menu focuses on food and beverages, crafted from a range of classic American foods. The Company’s domestic menu includes a range of signature items, such as the ShackBurger, SmokeShack, Shack-cago Dog, ‘Shroom Burger, seasonal frozen custard, hand-spun shakes, concretes, ShackMeister Ale, and Shack Red and Shack White wines. As of December 28, 2016, it had 114 Shacks in 13 countries and 16 states, as well as the District of Columbia. Its burgers are made with a whole-muscle blend of all-natural, hormone and antibiotic-free Angus beef, ground fresh daily, cooked to order and served on a non-genetically modified organism potato bun.
Potbelly Corporation owns and operates Potbelly Sandwich Works sandwich shops in the United States. The Company has domestic and international franchise operations of Potbelly Sandwich Works sandwich shops. As of December 25, 2016, the Company operated Potbelly Sandwich Works sandwich shops in 29 states and the District of Columbia. As of December 25, 2016, the Company had a domestic base of 441 shops in 29 states and the District of Columbia. Of these, the company operated 411 shops, and franchisees operated 30 shops, as of December 25, 2016. As of December 25, 2016, the Company had 13 international franchised shops, which included 11 shops in the Middle East, a shop in the United Kingdom and a shop in Canada. As of December 25, 2016, the Company had domestic franchise shops in Arkansas, Iowa, Illinois, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Texas and Virginia.
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