Zumiez (NASDAQ:ZUMZ) versus Zalando (OTCMKTS:ZLNDY) Critical Survey

Zalando (OTCMKTS:ZLNDY) and Zumiez (NASDAQ:ZUMZ) are both retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Volatility and Risk

Zalando has a beta of 1.56, indicating that its share price is 56% more volatile than the S&P 500. Comparatively, Zumiez has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500.

Earnings and Valuation

This table compares Zalando and Zumiez”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zalando	$11.44 billion	0.71	$271.71 million	$0.57	26.82
Zumiez	$889.20 million	0.44	-$1.71 million	($0.01)	-2,263.00

Zalando has higher revenue and earnings than Zumiez. Zumiez is trading at a lower price-to-earnings ratio than Zalando, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Zalando and Zumiez’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zalando	2.49%	10.19%	3.37%
Zumiez	0.06%	0.19%	0.09%

Institutional and Insider Ownership

95.5% of Zumiez shares are held by institutional investors. 21.2% of Zumiez shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Zalando and Zumiez, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zalando	1	1	2	1	2.60
Zumiez	1	1	0	1	2.33

Zumiez has a consensus target price of $18.00, indicating a potential downside of 20.46%. Given Zumiez’s higher probable upside, analysts clearly believe Zumiez is more favorable than Zalando.

Summary

Zalando beats Zumiez on 11 of the 14 factors compared between the two stocks.

About Zalando

Zalando SE operates an online platform for fashion and lifestyle products. The company operates through Fashion Store and Offprice segments. It provides shoes, apparel, accessories, and beauty products with free delivery and returns, as well as various payment options. The company also sells its products through Lounge by Zalando; and brick-and-mortar outlet stores. It operates in Germany, Austria, Switzerland, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, Hungary, France, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. The company was founded in 2008 and is headquartered in Berlin, Germany.

About Zumiez

Zumiez Inc. operates as a specialty retailer of apparel, footwear, accessories, and hardgoods for young men and women. The company provides hardgoods, including skateboards, snowboards, bindings, components, and other equipment. It operates stores in the United States, Canada, Europe, and Australia under the names of Zumiez, Blue Tomato, and Fast Times. It operates zumiez.com, zumiez.ca, blue-tomato.com, and fasttimes.com.au e-commerce websites. Zumiez Inc. was founded in 1978 and is headquartered in Lynnwood, Washington.