Francesca’s Holdings Corporation (NASDAQ: FRAN) and Urban Outfitters (NASDAQ:URBN) are both consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Risk and Volatility

Francesca’s Holdings Corporation has a beta of 0.22, suggesting that its stock price is 78% less volatile than the S&P 500. Comparatively, Urban Outfitters has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500.

Insider and Institutional Ownership

87.6% of Urban Outfitters shares are owned by institutional investors. 1.2% of Francesca’s Holdings Corporation shares are owned by insiders. Comparatively, 26.3% of Urban Outfitters shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and price targets for Francesca’s Holdings Corporation and Urban Outfitters, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Francesca’s Holdings Corporation 0 6 2 0 2.25
Urban Outfitters 3 16 6 0 2.12

Francesca’s Holdings Corporation currently has a consensus price target of $13.86, suggesting a potential upside of 94.35%. Urban Outfitters has a consensus price target of $22.00, suggesting a potential downside of 4.14%. Given Francesca’s Holdings Corporation’s stronger consensus rating and higher probable upside, research analysts clearly believe Francesca’s Holdings Corporation is more favorable than Urban Outfitters.

Earnings and Valuation

This table compares Francesca’s Holdings Corporation and Urban Outfitters’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Francesca’s Holdings Corporation $493.21 million 0.53 $78.79 million $0.97 7.35
Urban Outfitters $3.53 billion 0.71 $407.95 million $1.49 15.40

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

Profitability

This table compares Francesca’s Holdings Corporation and Urban Outfitters’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Francesca’s Holdings Corporation 7.28% 31.88% 18.83%
Urban Outfitters 4.92% 13.61% 9.27%

Summary

Urban Outfitters beats Francesca’s Holdings Corporation on 9 of the 14 factors compared between the two stocks.

About Francesca’s Holdings Corporation

Francesca’s Holdings Corporation is a holding company. The Company is a specialty retailer, which operates a chain of boutiques across the United States. The Company offers a mix of apparel, jewelry, accessories and gifts. As of January 28, 2017, the Company operated 671 boutiques in 48 states and the District of Columbia, and also served its customers through www.francescas.com, its e-commerce Website. The Company offers apparel, such as dresses, fashion tops, sweaters, cardigans and wraps, bottoms, outerwear and jackets, tees and tanks, and intimates. The Company provides jewelry, such as necklaces, earrings, bracelets and rings. The Company offers accessories, such as handbags, clutches, wallets, shoes, belts, hats, scarves, sunglasses, watches and hair accessories. The Company provides gifts, such as fragrance, candles, bath and body, home accessories, books, wall art, nail polish and miscellaneous items. The Company operates its boutiques under the francesca’s brand.

About Urban Outfitters

Urban Outfitters, Inc. is a lifestyle specialty retail company. The Company operates through two segments: Retail and Wholesale. The Company’s Retail segment consists of its Urban Outfitters, Anthropologie, Free People, Terrain and Bhldn brands, whose merchandise is sold to its customers through retail stores, Websites, mobile applications, catalogs and customer contact centers. The Retail segment also includes Vetri Family, which operates restaurants under the names Amis, Alla Spina, Lo Spiedo, Pizzeria Vetri and Osteria. Its Wholesale segment consists of the Free People wholesale division that primarily designs, develops and markets young women’s contemporary casual apparel and shoes through individual and chain specialty stores and department stores. The Company’s Wholesale segment includes Free People-branded tops, bottoms, sweaters, dresses, intimates, shoes and activewear, which are sold through department and specialty stores around the world, and its Free People stores.

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