Critical Survey: Zumiez (NASDAQ:ZUMZ) vs. Children’s Place (NASDAQ:PLCE)

Children’s Place (NASDAQ:PLCE) and Zumiez (NASDAQ:ZUMZ) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, earnings, profitability, institutional ownership, valuation and analyst recommendations.

Valuation and Earnings

This table compares Children’s Place and Zumiez”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Children’s Place	$1.21 billion	0.05	-$88.26 million	($4.84)	-0.52
Zumiez	$929.06 million	0.37	$13.38 million	$0.83	24.66

Zumiez has lower revenue, but higher earnings than Children’s Place. Children’s Place is trading at a lower price-to-earnings ratio than Zumiez, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Children’s Place and Zumiez’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Children’s Place	-9.09%	N/A	-12.53%
Zumiez	1.54%	4.24%	2.05%

Risk and Volatility

Children’s Place has a beta of 1.97, suggesting that its stock price is 97% more volatile than the S&P 500. Comparatively, Zumiez has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.

Institutional and Insider Ownership

95.5% of Zumiez shares are held by institutional investors. 0.9% of Children’s Place shares are held by insiders. Comparatively, 24.3% of Zumiez shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations and price targets for Children’s Place and Zumiez, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Children’s Place	1	1	0	0	1.50
Zumiez	1	2	0	0	1.67

Children’s Place currently has a consensus price target of $4.00, indicating a potential upside of 58.10%. Zumiez has a consensus price target of $18.00, indicating a potential downside of 12.07%. Given Children’s Place’s higher probable upside, equities analysts plainly believe Children’s Place is more favorable than Zumiez.

Summary

Zumiez beats Children’s Place on 10 of the 13 factors compared between the two stocks.

About Children’s Place

The Children’s Place, Inc. engages in the provision of apparel, footwear, accessories, and other items for children. The firm also designs contracts to manufacture and sell fashionable and value-priced merchandise under the brand names of The Children’s Place, Baby Place, and Gymboree. It operates through The Children’s Place U.S. and The Children’s Place International segments. The Children’s Place U.S. segment refers to the company’s U.S. and Puerto Rico-based stores and revenue from its U.S. based wholesale business. The Children’s Place International segment is involved in the Canadian-based stores, revenue from the company’s Canadian-based wholesale business, as well as revenue from international franchisees. The company was founded by David Pulver and Clinton A. Clark in 1969 and is headquartered in Secaucus, NJ.

About Zumiez

Zumiez Inc. operates as a specialty retailer of apparel, footwear, accessories, and hardgoods for young men and women. The company provides hardgoods, including skateboards, snowboards, bindings, components, and other equipment. It operates stores in the United States, Canada, Europe, and Australia under the names of Zumiez, Blue Tomato, and Fast Times. It operates zumiez.com, zumiez.ca, blue-tomato.com, and fasttimes.com.au e-commerce websites. Zumiez Inc. was founded in 1978 and is headquartered in Lynnwood, Washington.