Ross Stores (NASDAQ: ROST) and Tilly’s (NYSE:TLYS) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Profitability

This table compares Ross Stores and Tilly’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ross Stores 8.87% 42.95% 21.77%
Tilly’s 2.09% 8.85% 5.50%

Insider and Institutional Ownership

89.6% of Ross Stores shares are owned by institutional investors. Comparatively, 40.3% of Tilly’s shares are owned by institutional investors. 2.3% of Ross Stores shares are owned by insiders. Comparatively, 53.4% of Tilly’s shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Ross Stores and Tilly’s’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ross Stores $13.33 billion 1.74 $2.19 billion $3.03 20.00
Tilly’s $572.08 million 0.58 $50.50 million $0.41 28.15

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

Analyst Recommendations

This is a breakdown of current ratings for Ross Stores and Tilly’s, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ross Stores 0 7 13 0 2.65
Tilly’s 0 2 2 0 2.50

Ross Stores currently has a consensus price target of $70.41, suggesting a potential upside of 16.19%. Tilly’s has a consensus price target of $11.50, suggesting a potential downside of 0.35%. Given Ross Stores’ stronger consensus rating and higher probable upside, equities analysts plainly believe Ross Stores is more favorable than Tilly’s.

Dividends

Ross Stores pays an annual dividend of $0.64 per share and has a dividend yield of 1.1%. Tilly’s does not pay a dividend. Ross Stores pays out 21.1% of its earnings in the form of a dividend. Tilly’s has raised its dividend for 10 consecutive years.

Volatility and Risk

Ross Stores has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500. Comparatively, Tilly’s has a beta of -0.47, suggesting that its stock price is 147% less volatile than the S&P 500.

Summary

Ross Stores beats Tilly’s on 13 of the 17 factors compared between the two stocks.

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.

About Tilly’s

Tilly’s, Inc. is a destination specialty retailer of casual apparel, footwear and accessories for young men, young women, boys and girls. The Company offers an unparalleled selection of relevant brands, styles, colors, sizes and price points. The Company’s apparel merchandise includes branded, fashion and styles for tops, outerwear, bottoms and dresses. Its accessories merchandise includes backpacks, hats, sunglasses, headphones, handbags, watches, jewelry and others. The Company offers its products through stores and Website. The Company operates over 220 stores in approximately 30 states. The Company’s stores are located in malls, lifestyle centers, power centers, community centers, outlet centers and street-front locations. The Company also operates an e-commerce platform for desktop and mobile. The Company’s third-party brands include AYC, Adidas, Billabong, Converse, Hurley, Nixon, JanSport, LRG and Stance, among others.

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