Critical Analysis: Denny’s (NASDAQ:DENN) vs. TH International (NASDAQ:THCH)

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

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%

Risk & Volatility

Denny’s has a beta of 2.08, indicating that its share price is 108% more volatile than the S&P 500. Comparatively, TH International has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500.

Valuation and Earnings

This table compares Denny’s and TH International”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	$452.33 million	0.42	$21.57 million	$0.41	8.96
TH International	$1.45 billion	0.07	-$123.81 million	($2.55)	-1.15

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.

Institutional & Insider Ownership

85.1% of Denny’s shares are owned by institutional investors. Comparatively, 91.8% of TH International shares are owned by institutional investors. 4.2% of Denny’s shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices 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 presently has a consensus price target of $7.75, indicating a potential upside of 110.88%. Given Denny’s’ stronger consensus rating and higher probable 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.