Comparing Aterian (NASDAQ:ATER) and Cricut (NASDAQ:CRCT)

Cricut (NASDAQ:CRCT) and Aterian (NASDAQ:ATER) are both small-cap consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, institutional ownership, profitability, dividends and earnings.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Cricut and Aterian, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cricut	4	1	0	1	1.67
Aterian	1	0	0	0	1.00

Cricut presently has a consensus price target of $4.07, suggesting a potential downside of 29.40%. Given Cricut’s stronger consensus rating and higher possible upside, research analysts plainly believe Cricut is more favorable than Aterian.

Earnings and Valuation

This table compares Cricut and Aterian”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cricut	$708.78 million	1.70	$76.71 million	$0.43	13.40
Aterian	$68.97 million	0.08	-$18.98 million	($1.99)	-0.26

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

Volatility and Risk

Cricut has a beta of 0.25, meaning that its stock price is 75% less volatile than the S&P 500. Comparatively, Aterian has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500.

Profitability

This table compares Cricut and Aterian’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cricut	12.71%	24.57%	15.42%
Aterian	-49.30%	-92.04%	-47.83%

Institutional and Insider Ownership

19.6% of Cricut shares are held by institutional investors. Comparatively, 7.0% of Aterian shares are held by institutional investors. 16.5% of Cricut shares are held by insiders. Comparatively, 19.5% of Aterian shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Cricut beats Aterian on 12 of the 14 factors compared between the two stocks.

About Cricut

Cricut, Inc. engages in the design, marketing, and distribution of a creativity platform that enables users to turn ideas into professional-looking handmade goods. It operates through three segments: Connected Machines, Subscriptions, and Accessories and Materials. The company offers connected machines, design apps, and accessories and materials for users to create personalized birthday cards, mugs, T-shirts, and large-scale interior decorations. Its connected machines include Cricut Joy family for personalization, organization, and customization; Cricut Explore family for cutting, writing, and scoring; Cricut Maker family for cutting, writing, scoring, and adding decorative effects to various materials, such as paper, vinyl, iron-on vinyl, pens, and others; and Cricut Venture for cutting, writing, and scoring large-format projects at professional speeds. The company also provides Cricut Access and Cricut Access Premium subscription offerings, and in-app purchases; and a software that integrates its connected machines and design apps comprising Cricut Joy App, Design Space, and other design apps. In addition, it offers a range of accessories and materials, such as Cricut EasyPress, Cricut Mug Press, hand tools, machine replacement tools and blades, and project materials. The company offers its products through its third-party brick-and-mortar and online retail partners; and its website cricut.com, as well as through a network of distributors. It operates in the United States, Canada, the United Kingdom, Ireland, Australia, New Zealand, and Western Europe, as well as the Middle East, Latin America, South Africa, and Asia. The company was formerly known as Provo Craft & Novelty, Inc. and changed its name to Cricut, Inc. in March 2018. The company was incorporated in 1969 and is headquartered in South Jordan, Utah.

About Aterian

Aterian, Inc., together with its subsidiaries, operates as a technology-enabled consumer products company in North America and internationally. Its platform offers home and kitchen appliances; kitchenware; cooling and air quality appliances, such as dehumidifiers; health and beauty products; and essential oils under the Squatty Potty, hOmeLabs, Mueller, Pursteam, Healing Solutions, and Photo Paper Direct brand names. The company primarily serves individual online consumers through online retail channels, such as Amazon and Walmart, as well as through its owned and operated websites and other marketplaces. The company was formerly known as Mohawk Group Holdings, Inc. and changed its name to Aterian, Inc. in April 2021. Aterian, Inc. was founded in 2014 and is headquartered in Summit, New Jersey.