Critical Comparison: Zumiez (NASDAQ:ZUMZ) and Xcel Brands (NASDAQ:XELB)

Zumiez (NASDAQ:ZUMZ) and Xcel Brands (NASDAQ:XELB) are both small-cap retail/wholesale companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, profitability, institutional ownership, dividends, earnings, analyst recommendations and valuation.

Institutional and Insider Ownership

95.5% of Zumiez shares are owned by institutional investors. Comparatively, 18.5% of Xcel Brands shares are owned by institutional investors. 24.3% of Zumiez shares are owned by company insiders. Comparatively, 29.5% of Xcel Brands shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Zumiez and Xcel Brands, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zumiez	0	3	0	0	2.00
Xcel Brands	1	0	1	0	2.00

Zumiez currently has a consensus price target of $18.00, suggesting a potential upside of 3.51%. Xcel Brands has a consensus price target of $3.00, suggesting a potential upside of 49.25%. Given Xcel Brands’ higher possible upside, analysts clearly believe Xcel Brands is more favorable than Zumiez.

Profitability

This table compares Zumiez and Xcel Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zumiez	1.54%	4.24%	2.05%
Xcel Brands	-361.04%	-83.71%	-34.96%

Earnings and Valuation

This table compares Zumiez and Xcel Brands”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zumiez	$929.06 million	0.32	$13.38 million	$0.86	20.22
Xcel Brands	$4.75 million	2.56	-$17.46 million	($4.65)	-0.43

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

Risk & Volatility

Zumiez has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500. Comparatively, Xcel Brands has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500.

Summary

Zumiez beats Xcel Brands on 8 of the 13 factors compared between the two stocks.

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.

About Xcel Brands

Xcel Brands, Inc., together with its subsidiaries, operates as a media and consumer products company in the United States. The company designs, produces, markets, wholesales, and sells branded apparel, footwear, accessories, jewelry, home goods, and other consumer products; and acquires consumer lifestyle brands, including the Isaac Mizrahi, the LOGO by Lori Goldstein, the Judith Ripka, the Halston brand, the C Wonder, the TowerHill by Christie Brinkley brand (the CB brand), and other brands, as well as manages the Longaberger brand. It licenses its brands to third parties; and designs, produces, markets, and distributes through an omni-channel retail sales strategy, which include distribution through interactive television, digital live-stream shopping, brick-and-mortar retail, and e-commerce channels. The company also offers live streaming, social media and other marketing, and public relations support for its brands. In addition, it markets its brands through www.isaacmizrahi.com; www.halston.com; www.judithripka.com; www.cwonder.com; www.lorigoldstein.com; and www.longaberger.com. Xcel Brands, Inc. was founded in 2011 and is headquartered in New York, New York.