Ralph Lauren (NYSE: RL) and K Swiss (NASDAQ:KSWS) are both cyclical consumer goods & services companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Dividends

Ralph Lauren pays an annual dividend of $2.00 per share and has a dividend yield of 1.9%. K Swiss does not pay a dividend. Ralph Lauren pays out 208.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ralph Lauren has increased its dividend for 5 consecutive years.

Earnings and Valuation

This table compares Ralph Lauren and K Swiss’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ralph Lauren $6.65 billion 1.26 -$99.30 million $0.96 107.61
K Swiss N/A N/A N/A ($0.98) -4.84

K Swiss has lower revenue, but higher earnings than Ralph Lauren. K Swiss is trading at a lower price-to-earnings ratio than Ralph Lauren, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings for Ralph Lauren and K Swiss, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ralph Lauren 4 10 5 0 2.05
K Swiss 0 0 0 0 N/A

Ralph Lauren currently has a consensus price target of $88.73, indicating a potential downside of 14.11%. Given Ralph Lauren’s higher probable upside, research analysts plainly believe Ralph Lauren is more favorable than K Swiss.

Institutional & Insider Ownership

66.9% of Ralph Lauren shares are held by institutional investors. 32.9% of Ralph Lauren shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Ralph Lauren has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500. Comparatively, K Swiss has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500.

Profitability

This table compares Ralph Lauren and K Swiss’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ralph Lauren 8.64% 16.79% 9.74%
K Swiss N/A N/A N/A

Summary

Ralph Lauren beats K Swiss on 12 of the 14 factors compared between the two stocks.

About Ralph Lauren

Ralph Lauren Corporation is engaged in the design, marketing and distribution of lifestyle products, including apparel, accessories, home furnishings and other licensed product categories. The Company operates through three segments: Wholesale, Retail and Licensing. Wholesale business consists of sales made to department stores and specialty stores around the world. Retail business consists of sales made directly to consumers through retail channel, which includes Company’s’ retail stores, concession-based shop-within-shops and e-commerce operations around the world. Licensing business consists of royalty-based arrangements, under which the Company licenses to unrelated third parties for specified periods the right to operate retail stores and/or to use its various trademarks in connection with the manufacture and sale of designated products, such as certain apparel, eyewear, fragrances and home furnishings.

About K Swiss

K-Swiss Inc. (K-Swiss) is engaged in designing, developing and marketing an array of footwear, apparel and accessories for athletic, sports and fitness activities and casual wear under the K-Swiss brand. The Company also designs, develops and markets footwear for adventurers for all terrains under the Palladium brand. The Company sells products primarily to footwear stores, pro shops, sporting goods stores and department stores. Internationally, as of December 31, 2011, K-Swiss had the right to market its products in 124 countries through eight international subsidiaries and 29 distributors. During the year ended December 31, 2011, approximately 60%, 21%, 17% and 2% of the Company’s footwear products were manufactured in China, Thailand, Vietnam and Indonesia, respectively. In May 2013, E.Land World Ltd. completed the acquisition of K Swiss Inc in a merger transaction.

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