Critical Review: Roots (OTCMKTS:RROTF) & Five Below (NASDAQ:FIVE)

Roots (OTCMKTS:RROTF) and Five Below (NASDAQ:FIVE) are both consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.

Valuation & Earnings

This table compares Roots and Five Below”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Roots	N/A	N/A	N/A	N/A	N/A
Five Below	$5.08 billion	2.55	$358.64 million	$7.92	29.58

Five Below has higher revenue and earnings than Roots.

Profitability

This table compares Roots and Five Below’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Roots	N/A	N/A	N/A
Five Below	8.67%	21.31%	9.19%

Analyst Ratings

This is a breakdown of current ratings and target prices for Roots and Five Below, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Roots	0	1	0	0	2.00
Five Below	1	9	18	1	2.66

Five Below has a consensus price target of $256.05, suggesting a potential upside of 9.31%. Given Five Below’s stronger consensus rating and higher probable upside, analysts plainly believe Five Below is more favorable than Roots.

Summary

Five Below beats Roots on 8 of the 8 factors compared between the two stocks.

About Roots

Roots Corporation, together with its subsidiaries, designs, markets, and sells apparel, leather goods, footwear, and accessories under the Roots brand in Canada and internationally. The company operates through two segments, Direct-To-Consumer, and Partners and Other. The Direct-to-Consumer segment sells products through the company's corporate retail stores and ecommerce. The Partners and Other segment involved in the wholesale of Roots branded products to the company's international operating partners, licensees, and wholesale customers. Roots Corporation was founded in 1973 and is headquartered in Toronto, Canada.

About Five Below

Five Below, Inc. operates as a specialty value retailer in the United States. The company offers range of accessories, which includes novelty socks, sunglasses, jewelry, scarves, gloves, hair accessories, athletic tops and bottoms, and t-shirts, as well as nail polish, lip gloss, fragrance, and branded cosmetics; and personalized living space products, such as lamps, posters, frames, fleece blankets, plush items, pillows, candles, incense, lighting, novelty décor, accent furniture, and related items, as well as provides storage options. It provides assortment of sports balls, team sports merchandise, and fitness accessories comprising hand weights, jump ropes, and gym balls; various games, such as board games, puzzles, collectibles, and toys, including remote control; and summer season sports, which includes pool, beach, and outdoor toys, as well as games and accessories. In addition, the company offers accessories for cell phones, tablets, audio, and computers, as well as cases, chargers, headphones, and other related items; and media products including books, video games, and DVDs. It also provides assortment of craft activity kits, and arts and crafts supplies, such as crayons, markers, and stickers; and school products comprising backpacks, fashion notebooks and journals, novelty pens and pencils, and locker accessories. Further, the company offers party products, which includes party goods, decorations, gag gifts, and greeting cards, as well as every day and special occasion merchandise; assortment of classic and novelty candy bars, movie-size box candy, seasonal-related candy, and gum and snack food products, as well as sells chilled drinks through coolers; and provides seasonally specific items used to celebrate and decorate for events. The company was formerly known as Cheap Holdings, Inc. and changed its name to Five Below, Inc. in August 2002. Five Below, Inc. was incorporated in 2002 and is headquartered in Philadelphia, Pennsylvania.