L Brands (NYSE: LB) and Express (NYSE:EXPR) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, earnings, analyst recommendations, profitability and risk.

Institutional & Insider Ownership

79.5% of L Brands shares are held by institutional investors. Comparatively, 99.2% of Express shares are held by institutional investors. 16.7% of L Brands shares are held by insiders. Comparatively, 2.6% of Express shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings for L Brands and Express, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
L Brands 4 16 10 0 2.20
Express 0 7 1 0 2.13

L Brands presently has a consensus target price of $46.82, suggesting a potential upside of 18.09%. Express has a consensus target price of $9.61, suggesting a potential upside of 44.53%. Given Express’ higher probable upside, analysts clearly believe Express is more favorable than L Brands.

Profitability

This table compares L Brands and Express’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
L Brands 8.04% -103.18% 12.00%
Express 0.85% 4.25% 2.24%

Risk & Volatility

L Brands has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, Express has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500.

Dividends

L Brands pays an annual dividend of $2.40 per share and has a dividend yield of 6.1%. Express does not pay a dividend. L Brands pays out 70.4% of its earnings in the form of a dividend. Express has increased its dividend for 6 consecutive years.

Valuation & Earnings

This table compares L Brands and Express’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
L Brands $12.26 billion 0.92 $2.34 billion $3.41 11.63
Express $2.13 billion 0.25 $148.37 million $0.23 28.91

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

Summary

L Brands beats Express on 10 of the 17 factors compared between the two stocks.

L Brands Company Profile

L Brands, Inc. operates specialty retail business. The Company is focused on women’s intimate and other apparel, personal care, beauty and home fragrance categories. Its segments include Victoria’s Secret, Bath & Body Works, and Victoria’s Secret and Bath & Body Works International. It sells its merchandise through company-owned specialty retail stores in the United States, Canada, the United Kingdom and Greater China, which are mall-based; through Websites, and through international franchise, license and wholesale partners. It operates in the retail brands, which include Victoria’s Secret, PINK, Bath & Body Works and La Senza. La Senza is a specialty retailer of women’s intimate apparel. It sells its La Senza products at over 120 La Senza stores in Canada. Henri Bendel sells handbags, jewelry and other accessory products through New York and 28 other stores. Mast Global is a merchandise sourcing and production function serving the Company and its international partners.

Express Company Profile

Express, Inc. is a specialty apparel and accessories retailer offering both women’s and men’s merchandise. The Company targets women and men between 20 and 30 years old. It offers an assortment of fashionable apparel and accessories to address fashion needs across multiple aspects of lifestyles, including work, casual, jeanswear and going-out occasions. It is engaged in the operation of its brick-and-mortar retail and outlet stores, e-commerce operations and franchise operations. It sells its products through its e-commerce Website, www.express.com and its mobile application, and has franchise agreements with franchisees that operate Express locations in Latin America. It operated 656 stores across the United States, in Canada and in Puerto Rico, including 104 factory outlet stores, as of January 28, 2017. Its products are created by its in-house design team. Its portfolio of apparel products includes brands, such as Portofino shirt, Editor pant and 1MX shirt.

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