Critical Analysis: Adidas (OTCMKTS:ADDYY) & Capri (NYSE:CPRI)

Capri (NYSE:CPRI) and Adidas (OTCMKTS:ADDYY) are both consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitability, earnings and institutional ownership.

Valuation & Earnings

This table compares Capri and Adidas”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Capri	$3.47 billion	0.47	$137.00 million	$1.30	11.12
Adidas	$28.06 billion	1.03	$1.52 billion	$4.54	17.89

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

Profitability

This table compares Capri and Adidas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Capri	4.44%	297.36%	5.12%
Adidas	5.30%	22.35%	6.80%

Risk and Volatility

Capri has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500. Comparatively, Adidas has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500.

Insider & Institutional Ownership

84.3% of Capri shares are owned by institutional investors. 2.6% of Capri shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Capri and Adidas, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Capri	1	9	5	1	2.38
Adidas	1	4	10	1	2.69

Capri presently has a consensus target price of $21.93, suggesting a potential upside of 51.76%. Adidas has a consensus target price of $146.00, suggesting a potential upside of 79.78%. Given Adidas’ stronger consensus rating and higher probable upside, analysts clearly believe Adidas is more favorable than Capri.

Summary

Adidas beats Capri on 10 of the 14 factors compared between the two stocks.

About Capri

Capri Holdings Limited designs, markets, distributes, and retails branded women's and men's apparel, footwear, and accessories in the United States, Canada, Latin America, Europe, the Middle East, Africa, and Asia. It operates through three segments: Versace, Jimmy Choo, and Michael Kors. The company offers ready-to-wear, accessories, footwear, handbags, scarves and belts, small leather goods, eyewear, watches, jewelry, fragrances, and home furnishings through a distribution network, including boutiques, department, and specialty stores, as well as through e-commerce sites. It also engages in licensing agreements to the manufacture and sale of watches, jewelry, eyewear, and fragrances. The company was formerly known as Michael Kors Holdings Limited and changed its name to Capri Holdings Limited in December 2018. Capri Holdings Limited was founded in 1981 and is headquartered in London, the United Kingdom.

About Adidas

adidas AG, together with its subsidiaries, designs, develops, produces, and markets athletic and sports lifestyle products in Europe, the Middle East, Africa, North America, Greater China, the Asia-Pacific, and Latin America. It offers footwear, apparel, and accessories and gear, such as bags and balls under the adidas brand; golf footwear and apparel under the adidas Golf brand; and outdoor footwear under the Five Ten brand. It sells its products through its own retail stores; mono-branded franchise stores and shop-in-shops; and wholesale and its e-commerce channels. The company was formerly known as adidas-Salomon AG and changed its name to adidas AG in June 2006. adidas AG was founded in 1920 and is headquartered in Herzogenaurach, Germany.