Shake Shack (NYSE:SHAK) and Meritage Hospitality Group (OTCMKTS:MHGU) Head-To-Head Survey

Shake Shack (NYSE:SHAK) and Meritage Hospitality Group (OTCMKTS:MHGU) are both retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, earnings, institutional ownership and profitability.

Risk and Volatility

Shake Shack has a beta of 1.78, indicating that its stock price is 78% more volatile than the S&P 500. Comparatively, Meritage Hospitality Group has a beta of -0.07, indicating that its stock price is 107% less volatile than the S&P 500.

Insider and Institutional Ownership

86.1% of Shake Shack shares are owned by institutional investors. 8.5% of Shake Shack shares are owned by company insiders. Comparatively, 67.8% of Meritage Hospitality Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Shake Shack	2.76%	9.62%	2.81%
Meritage Hospitality Group	-5.14%	-23.95%	-3.52%

Analyst Recommendations

This is a breakdown of current recommendations for Shake Shack and Meritage Hospitality Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shake Shack	0	13	14	1	2.57
Meritage Hospitality Group	0	0	0	0	0.00

Shake Shack currently has a consensus price target of $107.92, indicating a potential upside of 53.86%. Given Shake Shack’s stronger consensus rating and higher probable upside, analysts clearly believe Shake Shack is more favorable than Meritage Hospitality Group.

Earnings & Valuation

This table compares Shake Shack and Meritage Hospitality Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shake Shack	$1.45 billion	2.07	$45.72 million	$1.09	64.35
Meritage Hospitality Group	$617.67 million	0.02	-$31.75 million	($5.81)	-0.35

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

Summary

Shake Shack beats Meritage Hospitality Group on 14 of the 15 factors compared between the two stocks.

About Shake Shack

Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally. Its Shacks offers hamburgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine, and other products. The company was founded in 2001 and is headquartered in New York, New York.

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.