Critical Analysis: Dorel Industries (OTCMKTS:DIIBF) & Purple Innovation (NASDAQ:PRPL)

Dorel Industries (OTCMKTS:DIIBF) and Purple Innovation (NASDAQ:PRPL) are both small-cap consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, risk, profitability, institutional ownership, earnings and dividends.

Risk & Volatility

Dorel Industries has a beta of 1.58, meaning that its stock price is 58% more volatile than the S&P 500. Comparatively, Purple Innovation has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500.

Insider and Institutional Ownership

88.4% of Purple Innovation shares are owned by institutional investors. 19.3% of Dorel Industries shares are owned by company insiders. Comparatively, 54.0% of Purple Innovation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Dorel Industries and Purple Innovation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dorel Industries	-12.73%	N/A	-11.58%
Purple Innovation	-10.74%	N/A	-10.89%

Analyst Recommendations

This is a summary of recent recommendations for Dorel Industries and Purple Innovation, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dorel Industries	0	1	0	0	2.00
Purple Innovation	1	2	0	0	1.67

Purple Innovation has a consensus price target of $16.25, indicating a potential upside of 271.85%. Given Purple Innovation’s higher probable upside, analysts clearly believe Purple Innovation is more favorable than Dorel Industries.

Earnings and Valuation

This table compares Dorel Industries and Purple Innovation”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dorel Industries	$1.19 billion	0.03	-$142.22 million	($4.16)	-0.27
Purple Innovation	$468.73 million	0.04	-$51.41 million	($11.24)	-0.39

Purple Innovation has lower revenue, but higher earnings than Dorel Industries. Purple Innovation is trading at a lower price-to-earnings ratio than Dorel Industries, indicating that it is currently the more affordable of the two stocks.

Summary

Purple Innovation beats Dorel Industries on 7 of the 12 factors compared between the two stocks.

About Dorel Industries

Dorel Industries Inc. engages in the design, manufacture, sourcing, marketing, and distribution of home and juvenile products worldwide. The company operates through Dorel Home and Dorel Juvenile segments. The Dorel Home segment offers ready-to assemble furniture and home furnishings products, including metal folding furniture, futons, children's furniture, step stools, hand trucks, ladders, outdoor furniture, and other imported furniture items. This segment markets its products under the DHP, Signature Sleep, Little Seeds, Ameriwood Home, Cosco Home & Office, Queer Eye, Cosmo Living, Novogratz, Real Rooms, Mr. Kate, Baby Relax, Alphason, Bertini, Ntense, and Notio brands. The Dorel Juvenile segment provides children's accessories comprising infant car seats, strollers, home equipment, toys, infant health, and safety aids under the Maxi-Cosi, Tiny Love, Infanti, Safety 1st, Bébé Confort, Quinny, and Cosco brands. The company was formerly known as Dorel Co. Ltd. and changed its name to Dorel Industries Inc. in May 1987. Dorel Industries Inc. was incorporated in 1962 and is headquartered in Westmount, Canada.

About Purple Innovation

Purple Innovation, Inc. designs and manufactures sleep and other products in the United States and internationally. The company offers mattresses, pillows, cushions, bases, sheets, platforms, adjustable bases, mattress protectors, foundations, blankets, duvets, duvet covers, seat cushions, and pet beds under the Purple brand. It markets and sells its products through its e-commerce online channels, retail brick-and-mortar wholesale partners, third-party online retailers, and Purple showrooms, as well as through its website, Purple.com. The company was founded in 2010 and is headquartered in Lehi, Utah.