Cheesecake Factory (NASDAQ:CAKE) and Arc Group (OTCMKTS:RLLY) Critical Comparison

Cheesecake Factory (NASDAQ:CAKE) and Arc Group (OTCMKTS:RLLY) are both retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, valuation, profitability, dividends, risk and institutional ownership.

Insider and Institutional Ownership

94.5% of Cheesecake Factory shares are held by institutional investors. 8.0% of Cheesecake Factory shares are held by insiders. Comparatively, 12.4% of Arc Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for Cheesecake Factory and Arc Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cheesecake Factory	3	11	5	0	2.11
Arc Group	0	0	0	0	0.00

Cheesecake Factory presently has a consensus target price of $66.29, indicating a potential downside of 14.23%. Given Arc Group’s higher possible upside, analysts clearly believe Arc Group is more favorable than Cheesecake Factory.

Profitability

This table compares Cheesecake Factory and Arc Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cheesecake Factory	4.34%	43.74%	5.81%
Arc Group	N/A	N/A	N/A

Valuation and Earnings

This table compares Cheesecake Factory and Arc Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cheesecake Factory	$3.75 billion	1.02	$148.43 million	$3.42	22.60
Arc Group	N/A	N/A	N/A	N/A	N/A

Cheesecake Factory has higher revenue and earnings than Arc Group.

Summary

Cheesecake Factory beats Arc Group on 7 of the 9 factors compared between the two stocks.

About Cheesecake Factory

The Cheesecake Factory Incorporated operates and licenses restaurants in the United States and Canada. The company operates bakeries that produce cheesecakes and other baked products for its restaurants, international licensees, third-party bakery customers, external foodservice operators, retailers, and distributors. It operates restaurants under the brands comprising The Cheesecake Factory, North Italia, Flower Child, Fox Restaurant Concepts. The Cheesecake Factory Incorporated was founded in 1972 and is headquartered in Calabasas, California.

About Arc Group

ARC Group, Inc. engages in the operation of Dick’s Wings brand of restaurants. It offers its traditional and boneless chicken wings, hog wings, and duck wings spun in its signature sauces and seasonings. The firm oprates through the following segments; Company-Owned Restaurants and Franchise Operations. The Company-Owned Restaurants are casual dining restaurants. The Franchise Operations segment offers franchises for the Dick’s Wings brand. It also offers craft beers under the name Dick’s Craft Beers. The company was founded in April 2000 and is headquartered in Jacksonville, FL.