Gap, Inc. (The) (NYSE: GPS) and Tilly’s (NYSE:TLYS) are both retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, risk, dividends and earnings.

Earnings and Valuation

This table compares Gap, Inc. (The) and Tilly’s’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Gap, Inc. (The) $15.52 billion 0.74 $676.00 million $2.17 13.55
Tilly’s $568.95 million 0.67 $11.41 million $0.41 32.12

Gap, Inc. (The) has higher revenue and earnings than Tilly’s. Gap, Inc. (The) is trading at a lower price-to-earnings ratio than Tilly’s, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Gap, Inc. (The) and Tilly’s, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gap, Inc. (The) 2 21 6 0 2.14
Tilly’s 0 2 2 0 2.50

Gap, Inc. (The) presently has a consensus target price of $27.65, indicating a potential downside of 5.96%. Tilly’s has a consensus target price of $12.50, indicating a potential downside of 5.09%. Given Tilly’s’ stronger consensus rating and higher possible upside, analysts plainly believe Tilly’s is more favorable than Gap, Inc. (The).

Volatility & Risk

Gap, Inc. (The) has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500. Comparatively, Tilly’s has a beta of -0.55, indicating that its share price is 155% less volatile than the S&P 500.

Insider and Institutional Ownership

57.7% of Gap, Inc. (The) shares are owned by institutional investors. Comparatively, 42.5% of Tilly’s shares are owned by institutional investors. 27.3% of Gap, Inc. (The) shares are owned by insiders. Comparatively, 50.1% of Tilly’s shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Gap, Inc. (The) pays an annual dividend of $0.92 per share and has a dividend yield of 3.1%. Tilly’s does not pay a dividend. Gap, Inc. (The) pays out 42.4% of its earnings in the form of a dividend. Tilly’s has raised its dividend for 7 consecutive years.

Profitability

This table compares Gap, Inc. (The) and Tilly’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gap, Inc. (The) 5.57% 27.47% 10.56%
Tilly’s 2.09% 8.85% 5.50%

Summary

Gap, Inc. (The) beats Tilly’s on 11 of the 17 factors compared between the two stocks.

About Gap, Inc. (The)

The Gap, Inc. (Gap Inc.) is an apparel retail company. The Company offers apparel, accessories and personal care products for men, women and children under the Gap, Banana Republic, Old Navy, Athleta and Intermix brands. Its products are available to customers online through Company-owned Websites and through the use of third-parties that provide logistics and fulfillment services. In addition to operating in the specialty, outlet, online and franchise channels, it also uses the Company’s omni-channel capabilities to bridge the digital world and physical stores. Its omni-channel services, including order-in-store, reserve-in-store, find-in-store and ship-from-store are tailored across its portfolio of brands. It also sells products that are designed and manufactured by branded third-parties, especially at its Intermix brands. It has Company-operated stores in the United States, Canada, the United Kingdom, France, Ireland, Japan, Italy, China, Hong Kong, Taiwan, and Mexico.

About Tilly’s

Tilly’s, Inc. is a destination specialty retailer of casual apparel, footwear and accessories for young men, young women, boys and girls. The Company offers an unparalleled selection of relevant brands, styles, colors, sizes and price points. The Company’s apparel merchandise includes branded, fashion and styles for tops, outerwear, bottoms and dresses. Its accessories merchandise includes backpacks, hats, sunglasses, headphones, handbags, watches, jewelry and others. The Company offers its products through stores and Website. The Company operates over 220 stores in approximately 30 states. The Company’s stores are located in malls, lifestyle centers, power centers, community centers, outlet centers and street-front locations. The Company also operates an e-commerce platform for desktop and mobile. The Company’s third-party brands include AYC, Adidas, Billabong, Converse, Hurley, Nixon, JanSport, LRG and Stance, among others.

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