Reviewing GAP (NYSE:GAP) and Tandy Leather Factory (NASDAQ:TLF)

Tandy Leather Factory (NASDAQ:TLF) and GAP (NYSE:GAP) are both retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, earnings, risk and analyst recommendations.

Valuation and Earnings

This table compares Tandy Leather Factory and GAP”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tandy Leather Factory	$76.32 million	0.25	$9.10 million	($0.24)	-9.79
GAP	$15.37 billion	0.45	$816.00 million	$2.54	7.48

GAP has higher revenue and earnings than Tandy Leather Factory. Tandy Leather Factory is trading at a lower price-to-earnings ratio than GAP, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

56.4% of Tandy Leather Factory shares are owned by institutional investors. Comparatively, 58.8% of GAP shares are owned by institutional investors. 36.2% of Tandy Leather Factory shares are owned by company insiders. Comparatively, 31.0% of GAP shares are owned by company 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.

Profitability

This table compares Tandy Leather Factory and GAP’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tandy Leather Factory	-2.94%	-4.31%	-2.74%
GAP	6.25%	21.13%	6.23%

Analyst Ratings

This is a summary of recent recommendations for Tandy Leather Factory and GAP, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tandy Leather Factory	1	0	0	0	1.00
GAP	0	8	8	2	2.67

GAP has a consensus price target of $28.00, indicating a potential upside of 47.37%. Given GAP’s stronger consensus rating and higher possible upside, analysts plainly believe GAP is more favorable than Tandy Leather Factory.

Volatility and Risk

Tandy Leather Factory has a beta of 0.47, meaning that its share price is 53% less volatile than the S&P 500. Comparatively, GAP has a beta of 2.04, meaning that its share price is 104% more volatile than the S&P 500.

Summary

GAP beats Tandy Leather Factory on 14 of the 15 factors compared between the two stocks.

About Tandy Leather Factory

Tandy Leather Factory, Inc. engages in the distribution of leather and related products. It offers leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, saddle and tack hardware, and do-it-yourself kits. It operates through North America and International geographical segments. The North America geographical segment consists of 115 stores, which offer a broad selection of products combined with leathercraft expertise in a one-stop shop. The International geographical segment comprises of similar to North America segment but generally located in light industrial areas. The company was founded by J. Wray Thompson, Sr. and Ronald C. Morgan in 1980 and is headquartered in Fort Worth, TX.

About GAP

Gap, Inc. operates as a global apparel retail company, which offers clothing, apparel, accessories, and personal care products for men, women, and children. The firm operates through the following segments: Gap Global, Old Navy Global, Banana Republic Global, Athleta, and Other. The Gap Global segment includes apparel and accessories for men and women under the Gap brand, along with the GapKids, BabyGap, GapMaternity, GapBody, and GapFit collections. The Old Navy Global segment offers clothing and accessories for adults and children. The Banana Republic Global segment provides clothing, eyewear, jewelry, shoes, handbags, and fragrances. The Athleta segment offers fitness apparel for women. The company founded by Donald G. Fisher and Doris F. Fisher in July 1969 and is headquartered in San Francisco, CA.