Critical Contrast: Aritzia (OTCMKTS:ATZAF) versus GAP (NYSE:GPS)

GAP (NYSE:GPS) and Aritzia (OTCMKTS:ATZAF) are both consumer cyclical companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Earnings and Valuation

This table compares GAP and Aritzia’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GAP	$15.00 billion	0.61	$502.00 million	$1.80	13.64
Aritzia	N/A	N/A	N/A	N/A	N/A

GAP has higher revenue and earnings than Aritzia.

Insider & Institutional Ownership

58.8% of GAP shares are owned by institutional investors. 30.8% of GAP shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations for GAP and Aritzia, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GAP	0	7	9	0	2.56
Aritzia	0	0	1	0	3.00

GAP presently has a consensus price target of $26.51, suggesting a potential upside of 7.99%. Aritzia has a consensus price target of $40.33, suggesting a potential upside of 18.21%. Given Aritzia’s stronger consensus rating and higher possible upside, analysts clearly believe Aritzia is more favorable than GAP.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
GAP	4.52%	27.57%	6.30%
Aritzia	N/A	N/A	N/A

Summary

GAP beats Aritzia on 7 of the 9 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 Aritzia

Aritzia Inc., together with its subsidiaries, designs and sells apparel and accessories for women in the United States and Canada. The company offers t-shirts and tops, sweaters, shirts and blouses, bodysuits, sweatshirts, blazers, jacket and coats, and dresses; pants, denim, leggings and bike shorts, sweatpants, skirts, shorts, sweatshorts, and jumpsuits and rompers; accessories, such as socks, hats, bags, scarves, belts, and intimates; swimwear; and shoes. It offers its products under the Wilfred, Wilfred Free, Babaton, The Group by Babaton, Babaton 101, Ten by Babaton, Tna, Little Moon, Sunday Best, Super World, TnAction, Denim Forum, Auxiliary, Talula, Tna x EMU, New Era, and Merrell brands. The company was formerly known as Aritzia Capital Corporation and changed its name to Aritzia Inc. in August 2016. Aritzia Inc. was founded in 1984 and is headquartered in Vancouver, Canada.