Xcel Brands (NASDAQ: XELB) and Ross Stores (NASDAQ:ROST) are both retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitabiliy, dividends, risk, earnings, analyst recommendations, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for Xcel Brands and Ross Stores, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Xcel Brands 0 0 2 0 3.00
Ross Stores 0 9 14 0 2.61

Xcel Brands currently has a consensus price target of $7.50, suggesting a potential upside of 120.59%. Ross Stores has a consensus price target of $70.11, suggesting a potential upside of 28.09%. Given Xcel Brands’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Xcel Brands is more favorable than Ross Stores.

Earnings and Valuation

This table compares Xcel Brands and Ross Stores’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Xcel Brands $32.82 million 1.64 $3.75 million $0.13 26.15
Ross Stores $13.08 billion 1.63 $2.13 billion $2.92 18.74

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

Institutional & Insider Ownership

22.5% of Xcel Brands shares are owned by institutional investors. Comparatively, 90.3% of Ross Stores shares are owned by institutional investors. 62.2% of Xcel Brands shares are owned by insiders. Comparatively, 2.3% of Ross Stores shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Xcel Brands has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, Ross Stores has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Xcel Brands 7.27% 0.20% 0.14%
Ross Stores 8.77% 42.56% 21.45%

Dividends

Ross Stores pays an annual dividend of $0.64 per share and has a dividend yield of 1.2%. Xcel Brands does not pay a dividend. Ross Stores pays out 21.9% of its earnings in the form of a dividend. Xcel Brands has raised its dividend for 10 consecutive years.

Summary

Ross Stores beats Xcel Brands on 10 of the 17 factors compared between the two stocks.

About Xcel Brands

Xcel Brands, Inc. is a brand development and media company. The Company is engaged in the design, production, licensing, marketing, and direct to consumer sales of branded apparel, footwear, accessories, jewelry, home goods, and other consumer products, and the acquisition of consumer lifestyle brands. The Company’s brand portfolio consists of the Isaac Mizrahi, Judith Ripka, H Halston, C Wonder and Highline Collective brands. The Company also manages and designs the Liz Claiborne New York brand (LCNY Brand). Isaac Mizrahi has over 150 different product categories, including sportswear, footwear, handbags, watches, eyewear, fragrance, tech accessories, intimates, bridal gowns and accessories, pet products, home and other merchandise. The Company’s Judith Ripka is a luxury jewelry brand. Wonder brand offers women’s clothing, footwear, jewelry and accessories; housewares, and home decor and gifts. The Liz Claiborne New York includes women’s apparel, footwear, outerwear and accessories.

About Ross Stores

Ross Stores, Inc. and its subsidiaries operate two brands of off-price retail apparel and home fashion stores-Ross Dress for Less (Ross) and dd’s DISCOUNTS. The Company is the off-price apparel and home fashion chain in the United States, with 1,340 locations in 36 states, the District of Columbia and Guam, as of January 28, 2017. The Company offers in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operated 193 dd’s DISCOUNTS stores in 15 states as of January 28, 2017. As of January 28, 2017, the Company operated a total of 1,533 stores consisted of 1,340 Ross stores and 193 dd’s DISCOUNTS stores. As of January 28, 2017, the Company owned and operated six distribution processing facilities-three in California, one in Pennsylvania, and two in South Carolina.

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