lululemon athletica inc. (NASDAQ: LULU) and Gildan Activewear (NYSE:GIL) are both mid-cap consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitabiliy, earnings, valuation, analyst recommendations, dividends, risk and institutional ownership.

Institutional and Insider Ownership

79.8% of lululemon athletica inc. shares are held by institutional investors. Comparatively, 77.3% of Gildan Activewear shares are held by institutional investors. 0.3% of lululemon athletica inc. shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

Gildan Activewear pays an annual dividend of $0.37 per share and has a dividend yield of 1.2%. lululemon athletica inc. does not pay a dividend. Gildan Activewear pays out 23.6% of its earnings in the form of a dividend. lululemon athletica inc. has increased its dividend for 4 consecutive years.

Earnings & Valuation

This table compares lululemon athletica inc. and Gildan Activewear’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
lululemon athletica inc. $2.37 billion 3.45 $507.41 million N/A N/A
Gildan Activewear $2.66 billion 2.56 $547.33 million $1.57 19.23

Gildan Activewear has higher revenue and earnings than lululemon athletica inc..

Volatility and Risk

lululemon athletica inc. has a beta of 0.24, indicating that its share price is 76% less volatile than the S&P 500. Comparatively, Gildan Activewear has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for lululemon athletica inc. and Gildan Activewear, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
lululemon athletica inc. 4 14 18 0 2.39
Gildan Activewear 0 4 6 1 2.73

lululemon athletica inc. presently has a consensus target price of $64.71, indicating a potential upside of 8.19%. Gildan Activewear has a consensus target price of $35.75, indicating a potential upside of 18.42%. Given Gildan Activewear’s stronger consensus rating and higher possible upside, analysts clearly believe Gildan Activewear is more favorable than lululemon athletica inc..

Profitability

This table compares lululemon athletica inc. and Gildan Activewear’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
lululemon athletica inc. 12.21% 23.43% 19.27%
Gildan Activewear 13.81% 18.09% 12.20%

Summary

lululemon athletica inc. beats Gildan Activewear on 9 of the 17 factors compared between the two stocks.

About lululemon athletica inc.

lululemon athletica inc. is a designer, distributor and retailer of athletic apparel. The Company operates through two segments: Company-operated stores and Direct to consumer. It is also engaged in the sale from outlets, showrooms, sales from temporary locations, sales to wholesale accounts, warehouse sales, and license and supply arrangements. Its direct to consumer segment generates revenue from its lululemon and ivivva e-commerce Websites, www.lululemon.com and www.ivivva.com, and other country and region specific Websites. It offers a range of apparel and accessories for women, men and female youth. The Company’s apparel assortment includes items, such as pants, shorts, tops, and jackets designed for healthy lifestyle and athletic activities, such as yoga, running, training, most other sweaty pursuits, and athletic wear for female youth. The Company also offers fitness-related accessories, including an array of items, such as bags, socks, underwear, yoga mats and water bottles.

About Gildan Activewear

Gildan Activewear Inc. is a manufacturer and marketer of branded basic family apparel, including T-shirts, fleece, sport shirts, underwear, socks, hosiery and shapewear. The Company operates through two segments: Printwear and Branded Apparel. The Printwear segment designs, manufactures, sources, markets, and distributes undecorated activewear products. The Branded Apparel segment designs, manufactures, sources, markets, and distributes branded family apparel, which includes athletic, casual and dress socks, underwear, activewear, sheer hosiery, legwear, and shapewear products, which are sold to retailers in the United States and Canada. The Company sells its products under various brands, including the Gildan, Gold Toe, Anvil, Comfort Colors, American Apparel, Alstyle, Secret, Silks, Kushyfoot, Secret Silky, Therapy Plus, Peds, and MediPeds brands. The Company distributes its products in printwear markets in the United States, Canada, Mexico, Europe, Asia-Pacific and Latin America.

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