TH International (NASDAQ:THCH) and Denny’s (NASDAQ:DENN) Critical Review

Denny’s (NASDAQ:DENN) and TH International (NASDAQ:THCH) are both small-cap retail/wholesale companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, risk, earnings and institutional ownership.

Institutional and Insider Ownership

85.1% of Denny’s shares are held by institutional investors. Comparatively, 91.8% of TH International shares are held by institutional investors. 4.2% of Denny’s shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Denny’s has a beta of 1.87, meaning that its stock price is 87% more volatile than the S&P 500. Comparatively, TH International has a beta of 0.51, meaning that its stock price is 49% less volatile than the S&P 500.

Earnings & Valuation

This table compares Denny’s and TH International”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Denny’s	$452.33 million	0.39	$21.57 million	$0.41	8.37
TH International	$1.45 billion	0.06	-$123.81 million	($2.55)	-1.02

Denny’s has higher earnings, but lower revenue than TH International. TH International is trading at a lower price-to-earnings ratio than Denny’s, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Denny’s and TH International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Denny’s	4.77%	-50.01%	5.92%
TH International	-40.57%	N/A	-16.23%

Analyst Recommendations

This is a breakdown of recent recommendations for Denny’s and TH International, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Denny’s	0	1	5	0	2.83
TH International	0	0	0	0	0.00

Denny’s currently has a consensus price target of $7.75, indicating a potential upside of 125.95%. Given Denny’s’ stronger consensus rating and higher possible upside, equities analysts plainly believe Denny’s is more favorable than TH International.

Summary

Denny’s beats TH International on 11 of the 14 factors compared between the two stocks.

About Denny’s

Denny’s Corp. engages in the operation of restaurants and franchised, and licensed restaurants. It operates through the Denny’s and Other segments. The Denny’s segment includes the results of all company and franchised and licensed Denny’s restaurants. The Other segment refers to the results of all company and franchise restaurants. The company was founded by Harold Butler and Richard Jezak in 1953 and is headquartered in Spartanburg, SC.

About TH International

TH International Limited operates Tim Hortons coffee shops in mainland China, Hong Kong, and Macau. The company offers brewed tea, coffee, milk tea, lemonade, hot chocolate, and coffee drinks. It is also involved in franchise related business. The company is based in Shanghai, the People's Republic of China.