Analyzing Meritage Hospitality Group (OTCMKTS:MHGU) and GEN Restaurant Group (NASDAQ:GENK)

Meritage Hospitality Group (OTCMKTS:MHGU) and GEN Restaurant Group (NASDAQ:GENK) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, risk, earnings, profitability, valuation and analyst recommendations.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Meritage Hospitality Group and GEN Restaurant Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meritage Hospitality Group	0	0	1	0	3.00
GEN Restaurant Group	0	0	3	0	3.00

Meritage Hospitality Group currently has a consensus price target of $24.00, indicating a potential upside of 37.50%. GEN Restaurant Group has a consensus price target of $13.83, indicating a potential upside of 76.22%. Given GEN Restaurant Group’s higher possible upside, analysts clearly believe GEN Restaurant Group is more favorable than Meritage Hospitality Group.

Profitability

This table compares Meritage Hospitality Group and GEN Restaurant Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Meritage Hospitality Group	1.31%	7.22%	1.08%
GEN Restaurant Group	0.44%	2.32%	0.43%

Valuation & Earnings

This table compares Meritage Hospitality Group and GEN Restaurant Group’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meritage Hospitality Group	$672.49 million	0.17	$6.14 million	$0.81	21.55
GEN Restaurant Group	$181.01 million	1.41	$8.41 million	$0.18	43.61

GEN Restaurant Group has lower revenue, but higher earnings than Meritage Hospitality Group. Meritage Hospitality Group is trading at a lower price-to-earnings ratio than GEN Restaurant Group, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

10.2% of GEN Restaurant Group shares are owned by institutional investors. 67.8% of Meritage Hospitality Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

About Meritage Hospitality Group

Meritage Hospitality Group Inc. operates quick-service and casual dining restaurants. The company operates restaurants under the Wendy's, Morning Belle, and Stan's Tacos, as well as Taco John's brand names in Arkansas, Connecticut, Florida, Georgia, Indiana, Massachusetts, Michigan, Missouri, Mississippi, North Carolina, South Carolina, Ohio, Oklahoma, Tennessee, Texas, and Virginia. It is also involved in franchising activities. The company was formerly known as Thomas Edison Inns, Inc. and changed its name to Meritage Hospitality Group Inc. in May 1996. Meritage Hospitality Group Inc. was incorporated in 1986 and is based in Grand Rapids, Michigan.

About GEN Restaurant Group

GEN Restaurant Group, Inc. operates restaurants in California, Arizona, Hawaii, Nevada, Texas, New York, and Florida. It offers meats, poultry, and seafood. The company was founded in 2011 and is based in Cerritos, California.