Critical Contrast: Franchise Group (FRG) versus Its Rivals

Franchise Group (NASDAQ: FRG) is one of 27 publicly-traded companies in the “Patent owners & lessors” industry, but how does it compare to its competitors? We will compare Franchise Group to similar businesses based on the strength of its analyst recommendations, dividends, risk, institutional ownership, earnings, profitability and valuation.

Valuation & Earnings

This table compares Franchise Group and its competitors top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Franchise Group $2.15 billion $25.06 million 9.77
Franchise Group Competitors $327.64 million $21.07 million 20.60

Franchise Group has higher revenue and earnings than its competitors. Franchise Group is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Dividends

Franchise Group pays an annual dividend of $1.50 per share and has a dividend yield of 3.1%. Franchise Group pays out 29.9% of its earnings in the form of a dividend. As a group, “Patent owners & lessors” companies pay a dividend yield of 1.9% and pay out 42.6% of their earnings in the form of a dividend. Franchise Group has raised its dividend for 2 consecutive years. Franchise Group is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Volatility & Risk

Franchise Group has a beta of 1.86, indicating that its share price is 86% more volatile than the S&P 500. Comparatively, Franchise Group’s competitors have a beta of 1.40, indicating that their average share price is 40% more volatile than the S&P 500.

Insider & Institutional Ownership

73.1% of Franchise Group shares are held by institutional investors. Comparatively, 44.9% of shares of all “Patent owners & lessors” companies are held by institutional investors. 30.1% of Franchise Group shares are held by company insiders. Comparatively, 22.8% of shares of all “Patent owners & lessors” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Franchise Group and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Franchise Group 7.56% 25.25% 4.79%
Franchise Group Competitors -6,804.63% 0.42% -2.25%

Analyst Recommendations

This is a breakdown of current ratings for Franchise Group and its competitors, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franchise Group 0 0 6 0 3.00
Franchise Group Competitors 68 376 826 16 2.61

Franchise Group currently has a consensus price target of $53.83, indicating a potential upside of 9.71%. As a group, “Patent owners & lessors” companies have a potential upside of 40.23%. Given Franchise Group’s competitors higher possible upside, analysts clearly believe Franchise Group has less favorable growth aspects than its competitors.

Summary

Franchise Group beats its competitors on 12 of the 15 factors compared.

Franchise Group Company Profile

Franchise Group, Inc. is a holding company, which engages in the provision of tax return preparation and related services and products. It operates through the following segments: Vitamin Shoppe, American Freight, Liberty Tax and Buddy’s. The Vitamin Shoppe segment is an omni-channel specialty retailer of vitamins, herbs, specialty supplements, sports nutrition and other health and wellness products. The American Freight segment is a retail chain offering in-store and online access to furniture, mattresses, new and out-of-box home appliances and home accessories at discount prices. The Liberty Tax segment provides income tax services. The Buddy’s segment is a specialty retailer of high quality, name-brand consumer electronics, residential furniture, appliances and household accessories through rent-to-own agreements. The firm offers personal and business tax preparation services, facilitates refund-based tax settlement financial products, and online tax preparation services. The company was founded by Danny Hewitt and John T. Hewitt on September 1, 1997 and is headquartered in Virginia Beach, VA.

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