Duluth Holdings (NASDAQ: DLTH) and Hanesbrands (NYSE:HBI) are both consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, risk, dividends and analyst recommendations.

Institutional and Insider Ownership

33.5% of Duluth Holdings shares are held by institutional investors. Comparatively, 94.3% of Hanesbrands shares are held by institutional investors. 70.4% of Duluth Holdings shares are held by company insiders. Comparatively, 1.1% of Hanesbrands shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Duluth Holdings and Hanesbrands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Duluth Holdings 4.71% 17.31% 12.18%
Hanesbrands 9.02% 64.80% 10.11%

Dividends

Hanesbrands pays an annual dividend of $0.60 per share and has a dividend yield of 2.5%. Duluth Holdings does not pay a dividend. Hanesbrands pays out 39.5% of its earnings in the form of a dividend. Duluth Holdings has raised its dividend for 3 consecutive years.

Earnings and Valuation

This table compares Duluth Holdings and Hanesbrands’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Duluth Holdings $391.17 million 1.63 $35.79 million $0.56 34.98
Hanesbrands $6.36 billion 1.39 $1.05 billion $1.52 15.96

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

Analyst Recommendations

This is a summary of current recommendations for Duluth Holdings and Hanesbrands, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Duluth Holdings 0 3 5 0 2.63
Hanesbrands 0 4 7 0 2.64

Duluth Holdings presently has a consensus price target of $27.01, indicating a potential upside of 37.85%. Hanesbrands has a consensus price target of $27.30, indicating a potential upside of 12.53%. Given Duluth Holdings’ higher probable upside, equities research analysts clearly believe Duluth Holdings is more favorable than Hanesbrands.

Volatility and Risk

Duluth Holdings has a beta of 0.19, suggesting that its share price is 81% less volatile than the S&P 500. Comparatively, Hanesbrands has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500.

Summary

Hanesbrands beats Duluth Holdings on 10 of the 17 factors compared between the two stocks.

About Duluth Holdings

Duluth Holdings Inc. is a lifestyle brand of men’s and women’s casual wear, workwear and accessories. The Company offers a line of functional products, such as its Longtail T shirts, Buck Naked underwear and Fire Hose work pants. The Company’s segments include direct and retail. The direct segment includes revenues from the Company’s Website and catalogs. The retail segment includes revenues from the Company’s retail and outlet stores. The Company offers its products under the Duluth Trading brand. The Company’s Website, www.duluthtrading.com, serves as a storefront for its product assortment. As of January 29, 2017, the Company operated 14 retail stores and two outlet stores. The Company’s stores range in size from approximately 6,000 to 14,000 selling square feet. The Company’s products also include Ballroom jeans, Duluthflex clothing, Armachillo shirts, Dry on the Fly pants, Armachillo underwear and No-Yank Tank.

About Hanesbrands

Hanesbrands Inc. is a marketer of basic innerwear and activewear apparel in the Americas, Europe, Australia and Asia/Pacific under apparel brands, such as Hanes, Champion, Maidenform, DIM, Bali, Playtex, Bonds, JMS/Just My Size, Nur Die/Nur Der, L’eggs, Lovable, Wonderbra, Flexees, Gear for Sports and Berlei. The Company operates through four segments: Innerwear, Activewear, Direct to Consumer and International. The Innerwear segment focuses on core apparel products, such as intimate apparel, men’s underwear, women’s panties, children’s underwear, socks and hosiery. The Company operates in the activewear market through its Champion, Hanes and JMS/Just My Size brands. The Direct to Consumer segment operations include its domestic Company-operated outlet stores and Website operations that sell its branded products directly to consumers in the United States. The International segment includes products that primarily span across the innerwear and activewear segments.

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