Denny's (NASDAQ:DENN – Get Rating) and First Watch Restaurant Group (NASDAQ:FWRG – Get Rating) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.
Profitability
This table compares Denny's and First Watch Restaurant Group's net margins, return on equity and return on assets.
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| Net Margins | Return on Equity | Return on Assets |
| Denny's | 23.41% | -53.52% | 8.53% |
| First Watch Restaurant Group | 0.51% | 0.75% | 0.33% |
Valuation & Earnings
This table compares Denny's and First Watch Restaurant Group's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
| Denny's | $398.17 million | 1.40 | $78.07 million | $1.57 | 6.12 |
| First Watch Restaurant Group | $601.19 million | 1.70 | -$2.11 million | $0.07 | 247.32 |
Denny's has higher earnings, but lower revenue than First Watch Restaurant Group. Denny's 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.
Analyst Recommendations
This is a summary of recent recommendations for Denny's and First Watch Restaurant Group, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
| Denny's | 0 | 3 | 5 | 0 | 2.63 |
| First Watch Restaurant Group | 0 | 2 | 9 | 0 | 2.82 |
Denny's presently has a consensus target price of $14.44, suggesting a potential upside of 50.23%. First Watch Restaurant Group has a consensus target price of $22.68, suggesting a potential upside of 31.03%. Given Denny's' higher probable upside, equities analysts plainly believe Denny's is more favorable than First Watch Restaurant Group.
Insider and Institutional Ownership
84.6% of Denny's shares are held by institutional investors. Comparatively, 95.5% of First Watch Restaurant Group shares are held by institutional investors. 5.5% of Denny's shares are held by company insiders. Comparatively, 4.1% of First Watch Restaurant Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Summary
First Watch Restaurant Group beats Denny's on 7 of the 13 factors compared between the two stocks.
About Denny's
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Denny's Corporation, through its subsidiary, Denny's, Inc., owns and operates full-service restaurant chains under the Denny's brand. As of December 29, 2021, it had 1,640 franchised, licensed, and company restaurants worldwide. The company was formerly known as Advantica Restaurant Group, Inc. and changed its name to Denny's Corporation in 2002. Denny's Corporation was founded in 1953 and is based in Spartanburg, South Carolina.
About First Watch Restaurant Group
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First Watch Restaurant Group, Inc. operates and franchises restaurants under the First Watch trade name. As of March 23, 2022, it operated 341 company-owned restaurants and 94 franchised restaurants in 28 states 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 headquartered in Bradenton, Florida.
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