Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 stocks made the list for top value stocks in the Restaurants & Bars industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Restaurants & Bars Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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4 Undervalued Restaurants & Bars Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Restaurants & Bars industry for Thursday, March 14, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Restaurants & Bars industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

GEN Restaurant Group Inc’s Value Grade

Value Grade:

GEN Restaurant Group, Inc. operates an Asian casual dining restaurant concept that offers a menu of traditional Korean and Korean-American food, including quality meats, poultry, seafood, and mixed vegetables (banchan). The Company's menu features chadol, Beef Bulgogi, Hawaiian Steak, Signature bone-in marinated short rib (Galbi), Smoked Garlic Samgyubsal, Red Wine Samgyubsal, Spicy Pork Bulgogi, Korean fried chicken, Spicy Chicken Bulgogi, Garlic Chicken, Cajun Chicken and others. The Company operates approximately 34 Company-owned restaurants located in California, Arizona, Hawaii, Nevada, Texas, New York and Florida. The Company's restaurants have modern decor, lively Korean pop music playing in the background, and embedded grills in the center of each table. It offers its customers a dining experience in which guests cook most of the food themselves, reducing the need for chefs and servers and providing a similar customer experience across the restaurants.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

GEN Restaurant Group Inc has a Value Score of 83, which is considered to be undervalued.

When you look at GEN Restaurant Group Inc’s price-to-sales ratio at 0.16 compared to the industry median at 1.07, this company has a lower price relative to revenue compared to its peers. This could make GEN Restaurant Group Inc’s stock more attractive for value investors.

GEN Restaurant Group Inc’s price-earnings ratio is 3.18 compared to the industry median at 21.08. This means it has a lower share price relative to earnings compared to its peers. This could make GEN Restaurant Group Inc more attractive for value investors.

Now, let’s assess GEN Restaurant Group Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 1.7, when compared to the industry median of 10.6, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. GEN Restaurant Group Inc’s shareholder yield is lower than its industry median ratio of 2.35%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. GEN Restaurant Group Inc’s price-to-book ratio is higher than its industry median ratio of 2.75. This could make GEN Restaurant Group Inc less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at GEN Restaurant Group Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. GEN Restaurant Group Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 32.55. This could make GEN Restaurant Group Inc more attractive because the lower P/FCF ratio indicates that GEN Restaurant Group Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Noble Roman's, Inc.’s Value Grade

Value Grade:

Noble Roman's, Inc. sells and services franchises and licenses and operates Company-owned stand-alone restaurants and non-traditional foodservice operations under the trade names Noble Roman's Craft Pizza & Pub, Noble Roman?s Pizza, Noble Roman?s Take-N-Bake, and Tuscano's Italian Style Subs. The Noble Roman?s Craft Pizza & Pub provides a selection of over 40 different toppings, cheeses and sauces from which to choose. Beer and wine are also featured, with 16 different beers on tap, including both national and local craft selections. Its beer and wine service are provided at the bar and throughout the dining room. The Company owns and operates approximately nine Craft Pizza & Pub locations and one non-traditional location in a hospital. Craft Pizza & Pub is designed to have a fun, pleasant atmosphere serving pizza and other related menu items. The Company?s subsidiaries include RH Roanoke, Inc. and Pizzaco, Inc.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Noble Roman's, Inc. has a Value Score of 72, which is considered to be undervalued.

Noble Roman's, Inc.’s price-earnings ratio is 19.0 compared to the industry median at 21.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Noble Roman's, Inc. more attractive for value investors.

Noble Roman's, Inc.’s price-to-book ratio is higher than its peers. This could make Noble Roman's, Inc. less attractive for value investors when compared to the industry median at 2.75.

You can read more about Noble Roman's, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Rave Restaurant Group Inc’s Value Grade

Value Grade:

Rave Restaurant Group, Inc. franchises, licenses and supplies Pie Five and Pizza Inn restaurants operating domestically and internationally. The Company, through its subsidiaries, franchises pizza buffet (Buffet Units), delivery/carry-out (Delco Units) and express (Express Units) restaurants under the trademark Pizza Inn and franchises fast casual pizza restaurants (Pie Five Units) under the trademark Pie Five Pizza Company (Pie Five). It also licenses Pizza Inn Express (PIE), kiosks under the trademark Pizza Inn. Its segments include Pizza Inn Franchising, Pie Five Franchising and Company-Owned Restaurants. The Pizza Inn and Pie Five Franchising segments establish franchisees, licensees and territorial rights. The Company-Owned Restaurants segment includes sales and operating results for all Company-owned restaurants. It facilitates food, equipment, and supply distribution to its domestic and international system of restaurants through agreements with third party distributors.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Rave Restaurant Group Inc has a Value Score of 61, which is considered to be undervalued.

Rave Restaurant Group Inc’s price-earnings ratio is 13.9 compared to the industry median at 21.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Rave Restaurant Group Inc more attractive for value investors.

Rave Restaurant Group Inc’s price-to-book ratio is higher than its peers. This could make Rave Restaurant Group Inc less attractive for value investors when compared to the industry median at 2.75.

You can read more about Rave Restaurant Group Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Red Robin Gourmet Burgers Inc’s Value Grade

Value Grade:

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, primarily operates, franchises, and develops casual dining restaurants in North America. The Company's menu features its signature product, a line of Gourmet Burgers with layers of fresh ingredients and fresh ground beef. It also offers burgers made with other proteins including chicken breasts (grilled or fried), turkey patties, as well as a proprietary vegetarian patty and the Impossible plant-based burger patty. The Company offer a selection of buns, including gluten free, sesame, brioche, and lettuce wraps, with a variety of toppings, including house-made sauces, crispy onion straws, sauteed mushrooms, several cheese choices, and a fried egg. It serves an array of other mainstream items, such as Donatos pizza, wings, salads, other entrees, and desserts. The Company’s beverage categories include alcoholic and non-alcoholic specialty drinks, cocktails, wine, and a variety of national and craft beers.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Red Robin Gourmet Burgers Inc has a Value Score of 97, which is considered to be undervalued.

You can read more about Red Robin Gourmet Burgers Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Restaurants & Bars Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Restaurants & Bars stocks as well as other industrys.

Choosing Which of the 4 Best Restaurants & Bars Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• GEN Restaurant Group Inc stock has a Value Grade of A.
• Noble Roman's, Inc. stock has a Value Grade of B.
• Rave Restaurant Group Inc stock has a Value Grade of B.
• Red Robin Gourmet Burgers Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 undervalued stocks in the Restaurants & Bars industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Restaurants & Bars Stocks

Want to learn more about Restaurants & Bars stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 4 Undervalued Restaurants & Bars Stocks for Thursday, March 14
• 4 Undervalued Restaurants & Bars Stocks for Wednesday, March 13
• Which Is a Better Investment, Sweetgreen Inc or Wingstop Inc Stock?
• Why Krispy Kreme Inc’s (DNUT) Stock Is Down 5.30%

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