Financial Analysis: Ralph Lauren Corporation (RL) & Duluth Holdings (DLTH)

Duluth Holdings (NASDAQ: DLTH) and Ralph Lauren Corporation (NYSE:RL) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, risk, earnings, institutional ownership, analyst recommendations, profitability and dividends.

Institutional and Insider Ownership

33.5% of Duluth Holdings shares are held by institutional investors. Comparatively, 62.9% of Ralph Lauren Corporation shares are held by institutional investors. 70.4% of Duluth Holdings shares are held by insiders. Comparatively, 32.9% of Ralph Lauren Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Duluth Holdings and Ralph Lauren Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Duluth Holdings 4.64% 17.05% 11.69%
Ralph Lauren Corporation -0.27% 13.80% 8.14%

Dividends

Ralph Lauren Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.2%. Duluth Holdings does not pay a dividend. Ralph Lauren Corporation pays out -869.6% of its earnings in the form of a dividend. Ralph Lauren Corporation has increased its dividend for 5 consecutive years.

Valuation and Earnings

This table compares Duluth Holdings and Ralph Lauren Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Duluth Holdings $391.17 million 1.60 $35.79 million $0.58 33.28
Ralph Lauren Corporation $6.45 billion 1.14 $987.10 million ($0.23) -394.74

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

Analyst Ratings

This is a summary of current recommendations and price targets for Duluth Holdings and Ralph Lauren Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Duluth Holdings 0 3 5 0 2.63
Ralph Lauren Corporation 1 12 4 0 2.18

Duluth Holdings currently has a consensus target price of $27.01, suggesting a potential upside of 39.93%. Ralph Lauren Corporation has a consensus target price of $83.17, suggesting a potential downside of 8.40%. Given Duluth Holdings’ stronger consensus rating and higher probable upside, equities analysts plainly believe Duluth Holdings is more favorable than Ralph Lauren Corporation.

Risk and Volatility

Duluth Holdings has a beta of 0.19, suggesting that its stock price is 81% less volatile than the S&P 500. Comparatively, Ralph Lauren Corporation has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500.

Summary

Duluth Holdings beats Ralph Lauren Corporation on 10 of the 17 factors compared between the two stocks.

Duluth Holdings Company Profile

Duluth Holdings Inc. is a lifestyle brand of men’s and women’s casual wear, workwear and accessories. The Company offers a line of functional products, such as its Longtail T shirts, Buck Naked underwear and Fire Hose work pants. The Company’s segments include direct and retail. The direct segment includes revenues from the Company’s Website and catalogs. The retail segment includes revenues from the Company’s retail and outlet stores. The Company offers its products under the Duluth Trading brand. The Company’s Website, www.duluthtrading.com, serves as a storefront for its product assortment. As of January 29, 2017, the Company operated 14 retail stores and two outlet stores. The Company’s stores range in size from approximately 6,000 to 14,000 selling square feet. The Company’s products also include Ballroom jeans, Duluthflex clothing, Armachillo shirts, Dry on the Fly pants, Armachillo underwear and No-Yank Tank.

Ralph Lauren Corporation Company Profile

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.

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