Critical Comparison: Crocs (NASDAQ:CROX) & lululemon athletica (NASDAQ:LULU)

lululemon athletica (NASDAQ:LULU) and Crocs (NASDAQ:CROX) are both consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, analyst recommendations, valuation, risk and dividends.

Institutional & Insider Ownership

85.2% of lululemon athletica shares are held by institutional investors. Comparatively, 93.4% of Crocs shares are held by institutional investors. 0.5% of lululemon athletica shares are held by insiders. Comparatively, 3.1% of Crocs shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares lululemon athletica and Crocs”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
lululemon athletica	$11.10 billion	1.16	$1.58 billion	$12.21	9.07
Crocs	$4.04 billion	1.72	-$81.20 million	$13.39	11.34

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

Risk and Volatility

lululemon athletica has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Crocs has a beta of 1.49, suggesting that its stock price is 49% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for lululemon athletica and Crocs, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
lululemon athletica	7	22	0	1	1.83
Crocs	1	4	12	2	2.79

lululemon athletica presently has a consensus price target of $105.26, suggesting a potential downside of 4.99%. Crocs has a consensus price target of $158.30, suggesting a potential upside of 4.24%. Given Crocs’ stronger consensus rating and higher probable upside, analysts clearly believe Crocs is more favorable than lululemon athletica.

Profitability

This table compares lululemon athletica and Crocs’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
lululemon athletica	12.78%	27.69%	15.81%
Crocs	16.20%	49.35%	15.68%

Summary

Crocs beats lululemon athletica on 12 of the 15 factors compared between the two stocks.

About lululemon athletica

Lululemon Athletica Inc., together with its subsidiaries, designs, distributes, and retails athletic apparel, footwear, and accessories under the lululemon brand for women and men. It offers pants, shorts, tops, and jackets for healthy lifestyle, such as yoga, running, training, and other activities. It also provides fitness-inspired accessories. The company sells its products through a chain of company-operated stores; outlets; interactive workout platform; yoga and fitness studios, university campus retailers, and other partners; license and supply arrangements; and temporary locations, as well as through mobile apps and lululemon.com e-commerce website. It has operations in the United States, Canada, Mainland China, Australia, South Korea, Hong Kong, Japan, New Zealand, Taiwan, Singapore, Malaysia, Macau, Thailand, the Asia Pacific, the United Kingdom, Germany, France, Ireland, Spain, the Netherlands, Sweden, Norway, Switzerland, Europe, the Middle East, and Africa. Lululemon Athletica Inc. was founded in 1998 and is based in Vancouver, Canada.

About Crocs

Crocs, Inc., together with its subsidiaries, designs, develops, manufactures, markets, distributes, and sells casual lifestyle footwear and accessories for men, women, and children under Crocs and HEYDUDE Brand in the United States and internationally. The company offers various footwear products, including clogs, sandals, slides, flips, wedges, platforms, socks, boots, charms, flip flops, sneakers, and slippers. It sells its products through wholesalers, retail stores, e-commerce sites, third-party marketplaces, and kiosks/store-in-store locations. Crocs, Inc. was founded in 1999 and is headquartered in Broomfield, Colorado.