Critical Contrast: First Watch Restaurant Group (NASDAQ:FWRG) and Dine Brands Global (NYSE:DIN)

First Watch Restaurant Group (NASDAQ:FWRG) and Dine Brands Global (NYSE:DIN) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Profitability

This table compares First Watch Restaurant Group and Dine Brands Global’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Watch Restaurant Group	2.51%	4.24%	1.86%
Dine Brands Global	11.14%	-35.88%	5.29%

Insider & Institutional Ownership

96.1% of First Watch Restaurant Group shares are owned by institutional investors. Comparatively, 92.8% of Dine Brands Global shares are owned by institutional investors. 5.0% of First Watch Restaurant Group shares are owned by company insiders. Comparatively, 3.0% of Dine Brands Global shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

First Watch Restaurant Group has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500. Comparatively, Dine Brands Global has a beta of 1.72, suggesting that its stock price is 72% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for First Watch Restaurant Group and Dine Brands Global, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Watch Restaurant Group	0	2	4	1	2.86
Dine Brands Global	0	3	4	0	2.57

First Watch Restaurant Group currently has a consensus target price of $23.00, indicating a potential upside of 46.12%. Dine Brands Global has a consensus target price of $48.86, indicating a potential upside of 54.42%. Given Dine Brands Global’s higher possible upside, analysts clearly believe Dine Brands Global is more favorable than First Watch Restaurant Group.

Valuation & Earnings

This table compares First Watch Restaurant Group and Dine Brands Global”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Watch Restaurant Group	$964.86 million	0.98	$25.39 million	$0.38	41.42
Dine Brands Global	$821.39 million	0.59	$97.18 million	$5.62	5.63

Dine Brands Global has lower revenue, but higher earnings than First Watch Restaurant Group. Dine Brands Global is trading at a lower price-to-earnings ratio than First Watch Restaurant Group, indicating that it is currently the more affordable of the two stocks.

Summary

First Watch Restaurant Group beats Dine Brands Global on 8 of the 14 factors compared between the two stocks.

About First Watch Restaurant Group

First Watch Restaurant Group, Inc., through its subsidiaries, operates and franchises restaurants under the First Watch trade name in the United States. The company was formerly known as AI Fresh Super Holdco, Inc. and changed its name to First Watch Restaurant Group, Inc. in December 2019. First Watch Restaurant Group, Inc. was founded in 1983 and is based in Bradenton, Florida.

About Dine Brands Global

Dine Brands Global, Inc., together with its subsidiaries, owns, franchises, and operates restaurants in the United States and internationally. The company operates through six segments: Applebee's Franchise Operations, International House of Pancakes (IHOP) Franchise Solutions, Fuzzy's franchise operations, Rental Operations, Financing Operations, and Company-Operated Restaurant Operations. It owns and franchises three restaurant concepts, including Applebee's Neighborhood Grill + Bar within the casual dining category; and IHOP in the family dining category of the restaurant industry; Fuzzy's Taco Shop within the fast-casual dining category. In addition, its Applebee's restaurants offer American fare with drinks and local draft beers; IHOP restaurants provide full table services, food and beverage; and Fuzzy's Taco Shop offers baja-style mexican food like baja tacos, chips and queso, guacamole and salsa made in house, and a full bar including margaritas, and cold draft beer. The company was formerly known as DineEquity, Inc. and changed its name to Dine Brands Global, Inc. in February 2018. Dine Brands Global, Inc. was founded in 1958 and is headquartered in Pasadena, California.