Critical Analysis: lululemon athletica inc. (LULU) versus Vince Holding Corp. (VNCE)

lululemon athletica inc. (NASDAQ: LULU) and Vince Holding Corp. (NYSE:VNCE) are both consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations and price targets for lululemon athletica inc. and Vince Holding Corp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
lululemon athletica inc. 3 16 18 0 2.41
Vince Holding Corp. 0 1 2 0 2.67

lululemon athletica inc. presently has a consensus price target of $65.71, indicating a potential upside of 8.44%. Vince Holding Corp. has a consensus price target of $3.17, indicating a potential upside of 445.98%. Given Vince Holding Corp.’s stronger consensus rating and higher possible upside, analysts plainly believe Vince Holding Corp. is more favorable than lululemon athletica inc..

Earnings & Valuation

This table compares lululemon athletica inc. and Vince Holding Corp.’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
lululemon athletica inc. $2.44 billion 3.12 $519.98 million $2.08 29.13
Vince Holding Corp. $258.72 million 0.11 -$1.31 million ($3.60) -0.16

lululemon athletica inc. has higher revenue and earnings than Vince Holding Corp.. Vince Holding Corp. is trading at a lower price-to-earnings ratio than lululemon athletica inc., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares lululemon athletica inc. and Vince Holding Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
lululemon athletica inc. 11.68% 22.51% 18.58%
Vince Holding Corp. -68.88% -120.03% -8.52%

Risk & Volatility

lululemon athletica inc. has a beta of 0.22, suggesting that its stock price is 78% less volatile than the S&P 500. Comparatively, Vince Holding Corp. has a beta of 1.84, suggesting that its stock price is 84% more volatile than the S&P 500.

Institutional and Insider Ownership

79.6% of lululemon athletica inc. shares are owned by institutional investors. Comparatively, 14.3% of Vince Holding Corp. shares are owned by institutional investors. 0.3% of lululemon athletica inc. shares are owned by company insiders. Comparatively, 58.4% of Vince Holding Corp. shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

lululemon athletica inc. beats Vince Holding Corp. on 9 of the 13 factors compared between the two stocks.

About lululemon athletica inc.

lululemon athletica inc. is a designer, distributor and retailer of athletic apparel. The Company operates through two segments: Company-operated stores and Direct to consumer. It is also engaged in the sale from outlets, showrooms, sales from temporary locations, sales to wholesale accounts, warehouse sales, and license and supply arrangements. Its direct to consumer segment generates revenue from its lululemon and ivivva e-commerce Websites, www.lululemon.com and www.ivivva.com, and other country and region specific Websites. It offers a range of apparel and accessories for women, men and female youth. The Company’s apparel assortment includes items, such as pants, shorts, tops, and jackets designed for healthy lifestyle and athletic activities, such as yoga, running, training, most other sweaty pursuits, and athletic wear for female youth. The Company also offers fitness-related accessories, including an array of items, such as bags, socks, underwear, yoga mats and water bottles.

About Vince Holding Corp.

Vince Holding Corp. (Vince) is a United States-based company, which offers a range of women’s and men’s apparel, women’s and men’s footwear, and handbags. The Company operates as a fashion brand. The Company operates in two segments: Wholesale and Direct-to-consumer. The Company’s Wholesale segment consists of its operations to distribute products to various department stores and specialty stores in the United States and select international markets. The Company’s Direct-to-consumer segment consists of its operations to distribute products directly to the consumer through its branded specialty retail stores, outlet stores and e-commerce platform. The Company utilizes luxe fabrications and various techniques to create its product assortment. The Company serves its customers through various channels, including wholesale department stores and specialty stores in the United States, as well as through its branded retail locations and its Website.

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