Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 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.

Latest Restaurants & Bars Stock News

Before choosing which top Restaurants & Bars stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

There is a neutral 12-month forecast for the restaurants sector. The acceptance of digital sales, the loosening of worldwide Covid-19 travel restrictions, and a relatively healthy labor environment will likely continue to have positive tailwind effects on demand for restaurants in the coming year. Given how much the macroeconomic background has deteriorated over the course of the year, the impacts of these tailwinds will most certainly fade over the course of this year's second half. Many eateries have significantly cut back on their hours of operation, closed down locations, and raised pricing. The Food Away from Home CPI Index, which jumped 7.7% YoY in June 2022, the highest 12-month growth since November 1981, provides evidence of the price increase. This trend may persist, but as consumers become more cost conscious, it will have a more detrimental effect on some parts of the restaurant subindustry than others. Through July 8, 2022, the S&P restaurants sub-industry index fell 18.6% vs. the 28.5% decline for the Consumer Discretionary sector and 18.2% decline for the S&P 1500. In 2021, the S&P restaurants sub-industry index grew 20.1% vs. the 24.4% gain in the broader Consumer Discretionary sector and 26.7% advance to the S&P 1500.

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.

Click the button below to learn more about A+ Investor and subscribe today.

3 Undervalued Restaurants & Bars Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Restaurants & Bars industry for Friday, June 16, 2023. 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.

FAT Brands Inc’s Value Grade

Value Grade:

FAT Brands Inc. is a multi-brand restaurant company. The Company develops, markets, acquires and manages quick service, fast casual, casual dining and polished casual dining restaurant concepts around the world. It operates primarily as a franchisor of restaurants. It owns about 17 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli's, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo's Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses. Round Table Pizza is the franchisor of quick service restaurants located primarily in California and the western United States. Fatburger is a hamburger restaurant, which offers a variety of made-to-order, customizable Fatburgers, Turkeyburgers, Chicken Sandwiches, Impossible Burgers and others. Marble Slab Creamery is a purveyor of hand-mixed ice cream. Johnny Rockets is a restaurant franchise.

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.

FAT Brands Inc has a Value Score of 68, which is considered to be undervalued.

When you look at FAT Brands Inc’s price-to-sales ratio at 0.28 compared to the industry median at 1.26, this company has a lower price relative to revenue compared to its peers. This could make FAT Brands Inc’s stock more attractive for value investors.

Now, let’s assess FAT Brands Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 42.2, when compared to the industry median of 11.7, the company may be considered overvalued 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. FAT Brands Inc’s shareholder yield is higher than its industry median ratio of 2.30%. 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.

Rave Restaurant Group Inc’s Value Grade

Value Grade:

Rave Restaurant Group, Inc. owns and operates franchises, licenses and supplies Pie Five and Pizza Inn restaurants operating domestically and internationally. The Company operates and franchises pizza buffet, delivery/carry-out and express restaurants under the trademark Pizza Inn and franchises fast casual pizza restaurants (Pie Five Units) under the trademarks Pie Five Pizza Company (Pie Five). The Company also licenses Pizza Inn Express (PIE, kiosks) under the trademark Pizza Inn. The Company facilitates food, equipment and supply distribution to its domestic and international system of restaurants through agreements with third party distributors. The Company’s 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.

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 70, which is considered to be undervalued.

Rave Restaurant Group Inc’s price-earnings ratio is 4.1 compared to the industry median at 22.7. 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 3.17.

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.

Carrols Restaurant Group Inc’s Value Grade

Value Grade:

Carrols Restaurant Group, Inc. is a restaurant company. The Company operates two quick-service restaurant brands, Burger King and Popeyes. Burger King restaurants are fast-food hamburger restaurants that feature the flame-broiled Whopper sandwich, as well as a range of hamburgers, chicken and other specialty sandwiches, French fries, salads, breakfast items, snacks, soft drinks and more. It operates approximately 1,022 Burger King restaurants located in restaurants located in 23 Northeastern, Midwestern, Southcentral and Southeastern states. Popeyes restaurants are quick-service chicken restaurants that feature a Louisiana-style menu, including fried chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional offerings. It operates approximately 65 Popeyes restaurants in over seven Southeastern states. It conducts all of its operations through its direct and indirect wholly owned subsidiaries, Carrols Corporation and New CFH, LLC.

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.

Carrols Restaurant Group Inc has a Value Score of 70, which is considered to be undervalued.

Carrols Restaurant Group Inc’s price-to-book ratio is higher than its peers. This could make Carrols Restaurant Group Inc less attractive for value investors when compared to the industry median at 3.17.

You can read more about Carrols 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.

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 3 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.

• FAT Brands Inc stock has a Value Grade of B.
• Rave Restaurant Group Inc stock has a Value Grade of B.
• Carrols Restaurant Group Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 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.

• 3 Undervalued Restaurants & Bars Stocks for Friday, June 16
• 3 Undervalued Restaurants & Bars Stocks for Thursday, June 15
• Why Carrols Restaurant Group Inc’s (TAST) Stock Is Up 6.07%
• Why Domino's Pizza Inc’s (DPZ) Stock Is Up 6.46%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.