Financial Contrast: GAP (NYSE:GAP) and Lands’ End (NASDAQ:LE)

GAP (NYSE:GAP) and Lands’ End (NASDAQ:LE) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, analyst recommendations, risk and institutional ownership.

Insider and Institutional Ownership

58.8% of GAP shares are held by institutional investors. Comparatively, 37.5% of Lands’ End shares are held by institutional investors. 31.0% of GAP shares are held by company insiders. Comparatively, 1.3% of Lands’ End shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for GAP and Lands’ End, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GAP	1	4	6	0	2.45
Lands’ End	0	0	1	0	3.00

GAP currently has a consensus price target of $28.50, suggesting a potential upside of 17.67%. Lands’ End has a consensus price target of $20.00, suggesting a potential upside of 48.92%. Given Lands’ End’s stronger consensus rating and higher probable upside, analysts clearly believe Lands’ End is more favorable than GAP.

Valuation and Earnings

This table compares GAP and Lands’ End”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GAP	$15.24 billion	0.60	$502.00 million	$2.16	11.21
Lands’ End	$1.44 billion	0.29	-$130.68 million	($0.66)	-20.35

GAP has higher revenue and earnings than Lands’ End. Lands’ End is trading at a lower price-to-earnings ratio than GAP, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

GAP has a beta of 2.36, suggesting that its share price is 136% more volatile than the S&P 500. Comparatively, Lands’ End has a beta of 2.75, suggesting that its share price is 175% more volatile than the S&P 500.

Profitability

This table compares GAP and Lands’ End’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GAP	5.40%	29.03%	7.26%
Lands’ End	-1.46%	1.24%	0.35%

Summary

GAP beats Lands’ End on 11 of the 14 factors compared between the two stocks.

About GAP

The Gap, Inc. operates as an apparel retail company. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. Its products include adult apparel and accessories; and fitness and lifestyle products for use in yoga, training, sports, travel, and everyday activities for women and girls. The company offers its products through company-operated stores, franchise stores, websites, and third-party arrangements. It has franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta stores and websites in Asia, Europe, Latin America, the Middle East, and Africa. The Gap, Inc. was incorporated in 1969 and is headquartered in San Francisco, California.

About Lands’ End

Lands’ End, Inc. operates as a digital retailer of apparel, swimwear, outerwear, accessories, footwear, home products, and uniform in the United States, Europe, Asia, and internationally. It operates through U.S. eCommerce, International, Outfitters, Third Party, and Retail segments. The company also sells uniform and logo apparel. It sells its products through e-commerce and company operated stores, as well as through third party distribution channels under the Lands’ End, Lands’ End Lighthouse, Squall, Tugless Tank, Drifter, Outrigger, and Marinac, Beach Living brands, as well as Supima, No-Gape, Starfish, Little Black Suit, Iron Knees, Hyde Park, Year’ Rounder, ClassMate, Willis & Geiger, and ThermaCheck brands. Lands’ End, Inc. was founded in 1963 and is headquartered in Dodgeville, Wisconsin.