Sonic (NASDAQ:SONC) vs. Famous Dave’s of America (NASDAQ:DAVE) Head-To-Head Review

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Famous Dave’s of America (NASDAQ:DAVE) and Sonic (NASDAQ:SONC) are both small-cap retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, risk, dividends, analyst recommendations, earnings and valuation.

Dividends

Sonic pays an annual dividend of $0.64 per share and has a dividend yield of 1.5%. Famous Dave’s of America does not pay a dividend. Sonic pays out 43.0% of its earnings in the form of a dividend. Sonic has raised its dividend for 4 consecutive years.

Insider & Institutional Ownership

52.1% of Famous Dave’s of America shares are owned by institutional investors. Comparatively, 89.1% of Sonic shares are owned by institutional investors. 43.0% of Famous Dave’s of America shares are owned by insiders. Comparatively, 8.3% of Sonic shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Famous Dave’s of America and Sonic, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Famous Dave’s of America 0 0 1 0 3.00
Sonic 0 10 1 0 2.09

Famous Dave’s of America currently has a consensus target price of $8.00, indicating a potential upside of 113.41%. Sonic has a consensus target price of $38.00, indicating a potential downside of 12.62%. Given Famous Dave’s of America’s stronger consensus rating and higher possible upside, equities analysts plainly believe Famous Dave’s of America is more favorable than Sonic.

Profitability

This table compares Famous Dave’s of America and Sonic’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Famous Dave’s of America 7.02% 21.63% 11.15%
Sonic 16.81% -21.64% 10.39%

Valuation and Earnings

This table compares Famous Dave’s of America and Sonic’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Famous Dave’s of America $54.89 million 0.63 $4.86 million N/A N/A
Sonic $423.59 million 3.66 $71.20 million $1.49 29.19

Sonic has higher revenue and earnings than Famous Dave’s of America.

Volatility and Risk

Famous Dave’s of America has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500. Comparatively, Sonic has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.

Summary

Sonic beats Famous Dave’s of America on 9 of the 15 factors compared between the two stocks.

Famous Dave’s of America Company Profile

Famous Dave's of America, Inc. develops, owns, operates, and franchises barbeque restaurants under the Famous Dave's name. It offers smoked, barbequed, and grilled meats, as well as entrée items and delicious side dishes that are prepared using prepared proprietary seasonings, sauces, and mixes. The company operates full-service and counter-service restaurants. As of March 4, 2019, it owned 17 locations and franchised 124 restaurants in 33 states, the Commonwealth of Puerto Rico, Canada, and the United Arab Emirates. Famous Dave's of America, Inc. was founded in 1994 and is headquartered in Minnetonka, Minnesota.

Sonic Company Profile

Sonic Corp., through its subsidiaries, operates and franchises a chain of drive-in restaurants in the United States. As of August 31, 2018, the company operated 3,606 Sonic Drive-Ins in 45 states, including 3,427 Drive-Ins owned and operated by franchisees; and 179 Drive-Ins owned and operated by the company. The company also owns and leases 162 properties; and sublease 48 properties to franchisees and other parties. Sonic Corp. was founded in 1953 and is headquartered in Oklahoma City, Oklahoma.

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