Reviewing GreenTree Hospitality Group (NYSE:GHG) and Nathan’s Famous (NASDAQ:NATH)

Nathan’s Famous (NASDAQ:NATH) and GreenTree Hospitality Group (NYSE:GHG) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

66.5% of Nathan’s Famous shares are held by institutional investors. Comparatively, 8.1% of GreenTree Hospitality Group shares are held by institutional investors. 30.7% of Nathan’s Famous shares are held by company insiders. Comparatively, 88.7% of GreenTree Hospitality Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Nathan’s Famous and GreenTree Hospitality Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nathan’s Famous	$162.06 million	2.49	$20.02 million	$4.83	20.39
GreenTree Hospitality Group	$1.01 billion	0.11	$23.85 million	$0.05	21.40

GreenTree Hospitality Group has higher revenue and earnings than Nathan’s Famous. Nathan’s Famous is trading at a lower price-to-earnings ratio than GreenTree Hospitality Group, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Nathan’s Famous has a beta of 0.29, indicating that its share price is 71% less volatile than the S&P 500. Comparatively, GreenTree Hospitality Group has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500.

Profitability

This table compares Nathan’s Famous and GreenTree Hospitality Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nathan’s Famous	11.78%	-187.25%	34.31%
GreenTree Hospitality Group	4.14%	2.49%	0.84%

Analyst Ratings

This is a summary of recent ratings and target prices for Nathan’s Famous and GreenTree Hospitality Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nathan’s Famous	0	0	1	0	3.00
GreenTree Hospitality Group	1	0	0	0	1.00

Dividends

Nathan’s Famous pays an annual dividend of $2.00 per share and has a dividend yield of 2.0%. GreenTree Hospitality Group pays an annual dividend of $0.05 per share and has a dividend yield of 4.7%. Nathan’s Famous pays out 41.4% of its earnings in the form of a dividend. GreenTree Hospitality Group pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Nathan’s Famous beats GreenTree Hospitality Group on 8 of the 15 factors compared between the two stocks.

About Nathan’s Famous

Nathan’s Famous, Inc. engages in the operation of franchised fast-food units. It is involved in the licensing, wholesaling, and retailing of products marketed under the Nathan’s Famous brand. The firm operates through the following business segments: Branded Product Program, Product Licensing, Restaurant Operations, and Corporate. The Branded Product Program segment markets and sells hot dog products. The Product Licensing segment is composed of royalties from licensing a variety of Nathan’s Famous products such as hotdogs, sausage and corned beef products, frozen French fries, and additional products through retail grocery channels and club stores. The Restaurant Operations segment deals with the sale of products at company-owned restaurants and fees and royalties from franchised restaurants. The Corporate segment includes administrative expenses such as executive management, finance, information technology, legal, insurance, corporate office costs, corporate incentive compensation, and compliance costs. The company was founded by Nathan Handwerker in 1916 and is headquartered in Jericho, NY.

About GreenTree Hospitality Group

GreenTree Hospitality Group Ltd., through its subsidiaries, develops leased-and-operated, and franchised-and-managed hotels under the GreenTree Inns brand in the People's Republic of China. It also engages in investment holding activities; and provision of information technology services. The company was founded in 2004 and is headquartered in Shanghai, the People's Republic of China.