Critical Analysis: L Brands (LB) vs. Genesco (GCO)
L Brands (NYSE: LB) and Genesco (NYSE:GCO) are both retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.
Valuation and Earnings
This table compares L Brands and Genesco’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|L Brands||$12.57 billion||1.12||$1.16 billion||$3.29||15.16|
|Genesco||$2.87 billion||0.27||$97.43 million||($6.33)||-6.05|
Risk & Volatility
L Brands has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500. Comparatively, Genesco has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500.
This is a summary of recent ratings and target prices for L Brands and Genesco, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
L Brands presently has a consensus price target of $52.66, indicating a potential upside of 5.59%. Genesco has a consensus price target of $37.89, indicating a potential downside of 1.07%. Given L Brands’ higher probable upside, equities research analysts plainly believe L Brands is more favorable than Genesco.
Institutional and Insider Ownership
78.5% of L Brands shares are held by institutional investors. Comparatively, 98.4% of Genesco shares are held by institutional investors. 16.7% of L Brands shares are held by company insiders. Comparatively, 3.3% of Genesco shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
L Brands pays an annual dividend of $2.40 per share and has a dividend yield of 4.8%. Genesco does not pay a dividend. L Brands pays out 72.9% of its earnings in the form of a dividend.
This table compares L Brands and Genesco’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
L Brands beats Genesco on 11 of the 16 factors compared between the two stocks.
L Brands Company Profile
L Brands, Inc. operates specialty retail business. The Company is focused on women’s intimate and other apparel, personal care, beauty and home fragrance categories. Its segments include Victoria’s Secret, Bath & Body Works, and Victoria’s Secret and Bath & Body Works International. It sells its merchandise through company-owned specialty retail stores in the United States, Canada, the United Kingdom and Greater China, which are mall-based; through Websites, and through international franchise, license and wholesale partners. It operates in the retail brands, which include Victoria’s Secret, PINK, Bath & Body Works and La Senza. La Senza is a specialty retailer of women’s intimate apparel. It sells its La Senza products at over 120 La Senza stores in Canada. Henri Bendel sells handbags, jewelry and other accessory products through New York and 28 other stores. Mast Global is a merchandise sourcing and production function serving the Company and its international partners.
Genesco Company Profile
Genesco Inc. is a retailer and wholesaler of footwear, apparel and accessories. The Company operates in five segments: Journeys Group, Schuh Group, Lids Sports Group, Johnston & Murphy Group and Licensed Brands. It relies on independent third-party manufacturers for production of its footwear products sold at wholesale. It sources footwear and accessory products from foreign manufacturers located in Bangladesh, Brazil, Cambodia, Canada, China, Dominican Republic, El Salvador, France, Germany, Hong Kong, India, Indonesia, Italy, Mexico, the Netherlands, Portugal, Peru, Romania, Taiwan and Vietnam. As of January 28, 2017, it operated 2,794 retail footwear, headwear and sports apparel and accessory stores and leased departments located primarily throughout the United States and in Puerto Rico, including 147 headwear and sports apparel and accessory stores and 87 footwear stores in Canada and 128 footwear stores in the United Kingdom, the Republic of Ireland and Germany.
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