Contrasting Chanticleer (BURG) and Sonic (SONC)

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Sonic (NASDAQ:SONC) and Chanticleer (NASDAQ:BURG) 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 risk, earnings, dividends, analyst recommendations, institutional ownership, valuation and profitability.

Dividends

Sonic pays an annual dividend of $0.64 per share and has a dividend yield of 1.5%. Chanticleer does not pay a dividend. Sonic pays out 51.2% of its earnings in the form of a dividend. Sonic has increased its dividend for 3 consecutive years.

Earnings & Valuation

This table compares Sonic and Chanticleer’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sonic $477.27 million 3.23 $63.66 million $1.25 34.61
Chanticleer $41.43 million 0.20 -$6.79 million ($1.78) -1.28

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

Analyst Ratings

This is a breakdown of current ratings and price targets for Sonic and Chanticleer, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sonic 0 12 2 0 2.14
Chanticleer 0 0 0 0 N/A

Sonic currently has a consensus target price of $35.38, indicating a potential downside of 18.23%. Given Sonic’s higher possible upside, research analysts clearly believe Sonic is more favorable than Chanticleer.

Institutional and Insider Ownership

4.2% of Chanticleer shares are owned by institutional investors. 8.3% of Sonic shares are owned by company insiders. Comparatively, 18.8% of Chanticleer shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Sonic has a beta of 1.47, indicating that its share price is 47% more volatile than the S&P 500. Comparatively, Chanticleer has a beta of 2.29, indicating that its share price is 129% more volatile than the S&P 500.

Profitability

This table compares Sonic and Chanticleer’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sonic 16.87% -23.60% 10.25%
Chanticleer -15.34% -35.65% -12.83%

Summary

Sonic beats Chanticleer on 12 of the 16 factors compared between the two stocks.

About Sonic

Sonic Corp. operates and franchises a chain of quick-service drive-in restaurants in the United States. As of August 31, 2017, the company operated 3,593 Sonic Drive-Ins in 45 states, of which 228 were owned and operated by the company and 3,365 were owned and operated by franchisees. The company also owns and leases 135 properties; and sublease 53 properties to franchisees and other parties. The company was founded in 1953 and is headquartered in Oklahoma City, Oklahoma.

About Chanticleer

Chanticleer Holdings, Inc., together with its subsidiaries, owns, operates, and franchises fast casual dining concepts in the United States and internationally. The company owns and operates 8 locations under the American Burger Company name in North Carolina, South Carolina, and New York; 8 company-owned locations in the United States and 13 franchisee-operated locations in the United States and the Middle East under The Burger Joint name; and 12 company-owned locations under the Little Big Burger name in the Portland, Oregon and Charlotte, North Carolina, as well as in Wallingford, Seattle. It also owns and operates 6 company-owned locations under the Just Fresh name in Charlotte, North Carolina; and 8 full service restaurants under the Hooters name in the United States, South Africa, and the United Kingdom. The company was formerly known as Tulvine Systems, Inc. and changed its name to Chanticleer Holdings, Inc. in May 2005. Chanticleer Holdings, Inc. was founded in 1999 and is based in Charlotte, North Carolina.

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