Bath & Body Works (NYSE:BBWI) and Lowe’s Companies (NYSE:LOW) Financial Contrast

Bath & Body Works (NYSE:BBWI) and Lowe’s Companies (NYSE:LOW) are both consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, institutional ownership, earnings, profitability and dividends.

Institutional & Insider Ownership

95.1% of Bath & Body Works shares are held by institutional investors. Comparatively, 74.1% of Lowe’s Companies shares are held by institutional investors. 0.3% of Bath & Body Works shares are held by company insiders. Comparatively, 0.3% of Lowe’s Companies shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Bath & Body Works pays an annual dividend of $0.80 per share and has a dividend yield of 5.0%. Lowe’s Companies pays an annual dividend of $5.00 per share and has a dividend yield of 2.7%. Bath & Body Works pays out 20.8% of its earnings in the form of a dividend. Lowe’s Companies pays out 42.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Lowe’s Companies has raised its dividend for 53 consecutive years. Bath & Body Works is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Bath & Body Works and Lowe’s Companies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bath & Body Works	10.83%	-53.48%	13.40%
Lowe’s Companies	7.34%	-75.67%	12.82%

Volatility and Risk

Bath & Body Works has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500. Comparatively, Lowe’s Companies has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Bath & Body Works and Lowe’s Companies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bath & Body Works	1	15	4	0	2.15
Lowe’s Companies	2	12	22	0	2.56

Bath & Body Works presently has a consensus target price of $22.13, indicating a potential upside of 39.01%. Lowe’s Companies has a consensus target price of $255.97, indicating a potential upside of 38.56%. Given Bath & Body Works’ higher probable upside, analysts plainly believe Bath & Body Works is more favorable than Lowe’s Companies.

Valuation and Earnings

This table compares Bath & Body Works and Lowe’s Companies”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bath & Body Works	$7.29 billion	0.44	$649.00 million	$3.84	4.15
Lowe’s Companies	$90.43 billion	1.15	$6.65 billion	$11.83	15.62

Lowe’s Companies has higher revenue and earnings than Bath & Body Works. Bath & Body Works is trading at a lower price-to-earnings ratio than Lowe’s Companies, indicating that it is currently the more affordable of the two stocks.

Summary

Bath & Body Works beats Lowe’s Companies on 9 of the 17 factors compared between the two stocks.

About Bath & Body Works

Bath & Body Works, Inc. is a specialty retailers and home to America’s Favorite Fragrances, offering a breadth of exclusive fragrances for the body and home, including the selling collections for fine fragrance mist, body lotion and body cream, 3-wick candles, home fragrance diffusers and liquid hand soap. The company was founded by Leslie Herbert Wexner in 1963 and is headquartered in Columbus, OH.

About Lowe’s Companies

Lowe’s Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States. The company offers a line of products for construction, maintenance, repair, remodeling, and decorating. It also provides home improvement products, such as appliances, seasonal and outdoor living, lawn and garden, lumber, kitchens and bath, tools, paint, millwork, hardware, flooring, rough plumbing, building materials, décor, and electrical. In addition, the company offers installation services through independent contractors in various product categories; and extended protection plans and repair services. It sells its national brand-name merchandise and private brand products to professional customers, homeowners, renters, businesses, and government. The company also sells its products through Lowes.com website; and through mobile applications. Lowe’s Companies, Inc. was founded in 1921 and is based in Mooresville, North Carolina.