Reviewing Lands’ End (NASDAQ:LE) and GAP (NYSE:GAP)

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

Profitability

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

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

Risk and Volatility

Lands’ End has a beta of 2.76, meaning that its share price is 176% more volatile than the S&P 500. Comparatively, GAP has a beta of 2.37, meaning that its share price is 137% more volatile than the S&P 500.

Insider & Institutional Ownership

37.5% of Lands’ End shares are held by institutional investors. Comparatively, 58.8% of GAP shares are held by institutional investors. 1.3% of Lands’ End shares are held by insiders. Comparatively, 31.0% of GAP shares are held 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 Ratings

This is a summary of recent recommendations and price targets for Lands’ End and GAP, as provided by MarketBeat.com.

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

Lands’ End currently has a consensus price target of $20.00, indicating a potential upside of 49.25%. GAP has a consensus price target of $28.50, indicating a potential upside of 17.38%. Given Lands’ End’s stronger consensus rating and higher possible upside, analysts clearly believe Lands’ End is more favorable than GAP.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lands’ End	$1.44 billion	0.29	-$130.68 million	($0.66)	-20.30
GAP	$15.24 billion	0.60	$502.00 million	$2.16	11.24

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.

Summary

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

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.

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.