FAT Brands (NASDAQ:FAT – Get Rating) and Portillo’s (NASDAQ:PTLO – Get Rating) are both small-cap retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.
Risk and Volatility
FAT Brands has a beta of 1.95, indicating that its stock price is 95% more volatile than the S&P 500. Comparatively, Portillo’s has a beta of 2.01, indicating that its stock price is 101% more volatile than the S&P 500.
Profitability
This table compares FAT Brands and Portillo’s’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| FAT Brands | -32.38% | N/A | -6.99% |
| Portillo’s | 1.67% | 2.95% | 1.11% |
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| FAT Brands | 0 | 0 | 0 | 0 | N/A |
| Portillo’s | 0 | 1 | 4 | 0 | 2.80 |
Portillo’s has a consensus target price of $26.00, indicating a potential upside of 24.05%. Given Portillo’s’ higher probable upside, analysts clearly believe Portillo’s is more favorable than FAT Brands.
Earnings & Valuation
This table compares FAT Brands and Portillo’s’ gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| FAT Brands | $407.22 million | 0.20 | -$126.19 million | ($8.16) | -0.63 |
| Portillo’s | $587.10 million | 1.96 | $10.85 million | $0.24 | 87.34 |
Portillo’s has higher revenue and earnings than FAT Brands. FAT Brands is trading at a lower price-to-earnings ratio than Portillo’s, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
13.3% of FAT Brands shares are owned by institutional investors. Comparatively, 72.9% of Portillo’s shares are owned by institutional investors. 59.9% of FAT Brands shares are owned by company insiders. Comparatively, 7.2% of Portillo’s shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Summary
Portillo’s beats FAT Brands on 12 of the 13 factors compared between the two stocks.
About FAT Brands
FAT Brands, Inc. engages in developing, marketing, acquiring, and managing fast casual and casual dining restaurant concepts around the world. Its brands include Yalla Mediterranean, Buffalo’s Cafe & Express, Ponderosa Steakhouse and Bonanza, Fatburger, Hurricane Grill & Wings, Bonanza Steak & BBQ, and Hurricane BTW. The company was founded by Andrew A. Wiederhorn on March 21, 2017 and is headquartered in Beverly Hills, CA.
About Portillo’s
Portillo's Inc. owns and operates fast casual and quick service restaurants in the United States. The company offers Chicago-style hot dogs and sausages, Italian beef sandwiches, burgers, chopped salads, crinkle-cut French fries, homemade chocolate cakes, and milkshakes. As of June 26, 2022, it owned and operated 71 Portillo's restaurants across nine states. The company also offers its products through its website. Portillo's Inc. was founded in 1963 and is based in Oak Brook, Illinois.
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