Comparing Groupon (NASDAQ:GRPN) & Macy’s (NYSE:M)

Groupon (NASDAQ:GRPN) and Macy’s (NYSE:M) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, earnings, institutional ownership, risk, analyst recommendations and valuation.

Profitability

This table compares Groupon and Macy’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Groupon	-25.26%	N/A	-20.28%
Macy’s	3.29%	13.21%	3.83%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Groupon and Macy’s, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Groupon	2	1	1	0	1.75
Macy’s	2	9	2	0	2.00

Groupon presently has a consensus price target of $26.00, suggesting a potential upside of 36.27%. Macy’s has a consensus price target of $22.78, suggesting a potential upside of 3.70%. Given Groupon’s higher probable upside, research analysts clearly believe Groupon is more favorable than Macy’s.

Institutional and Insider Ownership

90.0% of Groupon shares are owned by institutional investors. Comparatively, 87.4% of Macy’s shares are owned by institutional investors. 36.6% of Groupon shares are owned by company insiders. Comparatively, 1.1% of Macy’s shares are owned by company 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.

Volatility and Risk

Groupon has a beta of 0.24, suggesting that its share price is 76% less volatile than the S&P 500. Comparatively, Macy’s has a beta of 1.41, suggesting that its share price is 41% more volatile than the S&P 500.

Earnings and Valuation

This table compares Groupon and Macy’s”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Groupon	$498.42 million	1.56	-$83.52 million	($3.11)	-6.14
Macy’s	$22.62 billion	0.25	$642.00 million	$2.73	8.05

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

Summary

Macy’s beats Groupon on 10 of the 14 factors compared between the two stocks.

About Groupon

Groupon, Inc., together with its subsidiaries, operates a marketplace that connects consumers to merchants. It operates in two segments, North America and International. The company sells goods or services on behalf of third-party merchants. It serves customers through its mobile applications and websites. The company was formerly known as ThePoint.com, Inc. and changed its name to Groupon, Inc. in October 2008. Groupon, Inc. was incorporated in 2008 and is headquartered in Chicago, Illinois.

About Macy’s

Macy’s, Inc. engages in the retail of apparel, accessories, cosmetics, home furnishings, and other consumer goods. The firm’s brands include Macy’s, Bloomingdale’s, and Bluemercury. It offers men’s, women’s, and children’s apparel, women’s accessories, intimate apparel, shoes, cosmetics, fragrances, as well as home and miscellaneous products. The company was founded by Rowland H. Macy in 1858 and is headquartered in New York, NY.