Kirkland’s (NASDAQ: KIRK) and Shutterfly (NASDAQ:SFLY) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, valuation, profitabiliy, dividends, risk and institutional ownership.

Profitability

This table compares Kirkland’s and Shutterfly’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kirkland’s 1.46% 6.90% 3.35%
Shutterfly 1.06% 3.29% 1.61%

Risk and Volatility

Kirkland’s has a beta of 1.27, indicating that its share price is 27% more volatile than the S&P 500. Comparatively, Shutterfly has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.

Valuation and Earnings

This table compares Kirkland’s and Shutterfly’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kirkland’s $597.26 million 0.26 $39.26 million $0.54 17.74
Shutterfly $1.14 billion 1.41 $140.04 million $0.31 153.55

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

Insider and Institutional Ownership

89.3% of Kirkland’s shares are held by institutional investors. 7.8% of Kirkland’s shares are held by insiders. Comparatively, 5.7% of Shutterfly shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for Kirkland’s and Shutterfly, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kirkland’s 0 1 2 1 3.00
Shutterfly 0 5 4 0 2.44

Kirkland’s presently has a consensus target price of $14.17, indicating a potential upside of 47.88%. Shutterfly has a consensus target price of $53.11, indicating a potential upside of 11.58%. Given Kirkland’s’ stronger consensus rating and higher possible upside, research analysts clearly believe Kirkland’s is more favorable than Shutterfly.

Summary

Kirkland’s beats Shutterfly on 10 of the 15 factors compared between the two stocks.

Kirkland’s Company Profile

Kirkland’s, Inc. is a specialty retailer of home decor and gifts in the United States. The Company’s merchandise categories include wall decor, art, mirrors, lamps, decorative accessories, accent furniture, textiles, fragrance and accessories, frames, housewares, impulse and personal accessories, outdoor living and artificial floral products. The Company’s stores also offer a range of holiday merchandise during seasonal periods, as well as items carried throughout the year suitable for gift-giving. The Company’s average stores generally carry approximately 4,700 Stock Keeping Units (SKUs). The Company’s stores operate under various names, such as Kirkland’s, Kirkland’s Home, Kirkland’s Home Outlet, Kirkland’s Outlet and The Kirkland Collection. It operates approximately 380 stores in over 30 states, as well as an e-commerce enabled Website, www.kirklands.com. Its stores’ locations include Texas, Florida, California, Georgia, North Carolina, Alabama, Arizona, Virginia and Ohio.

Shutterfly Company Profile

Shutterfly, Inc. is an online manufacturer and retailer of personalized products and services. The Company focuses on helping consumers manage their memories through the medium of photography. The Company’s segments are Consumer and Shutterfly Business Solutions (SBS). The Consumer segment offers photo-based products, such as photo books, stationery and greeting cards, other photo-based merchandise, photo prints and statement gifts. The SBS segment includes printing and shipping of direct marketing and other variable data print products and formats. The Company provides a range of personalized photo-based products and services that enables the consumers to upload, edit, organize, find, share, create, print, and preserve their memories in a thoughtful manner. The Company’s brands include Shutterfly, Tiny Prints, Wedding Paper Divas, MyPublisher, BorrowLenses and Groovebook. The Company has its production facilities in Fort Mill, South Carolina; Shakopee, Minnesota, and Tempe, Arizona.

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