Financial Analysis: Charlie’s (OTCMKTS:CHUC) and Turning Point Brands (NYSE:TPB)

Charlie’s (OTCMKTS:CHUC) and Turning Point Brands (NYSE:TPB) are both small-cap consumer staples companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, risk, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Insider & Institutional Ownership

7.8% of Charlie’s shares are held by institutional investors. Comparatively, 96.1% of Turning Point Brands shares are held by institutional investors. 20.9% of Charlie’s shares are held by company insiders. Comparatively, 6.6% of Turning Point Brands shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Charlie’s and Turning Point Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Charlie’s	19.36%	-174.49%	36.91%
Turning Point Brands	10.34%	25.32%	9.52%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Charlie’s and Turning Point Brands, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Charlie’s	0	0	0	0	0.00
Turning Point Brands	0	2	5	1	2.88

Turning Point Brands has a consensus price target of $78.83, suggesting a potential downside of 19.29%. Given Turning Point Brands’ stronger consensus rating and higher probable upside, analysts plainly believe Turning Point Brands is more favorable than Charlie’s.

Valuation and Earnings

This table compares Charlie’s and Turning Point Brands”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Charlie’s	$8.49 million	10.06	-$4.16 million	$0.01	32.01
Turning Point Brands	$360.66 million	4.88	$39.81 million	$2.39	40.87

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

Risk & Volatility

Charlie’s has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, Turning Point Brands has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.

Summary

Turning Point Brands beats Charlie’s on 10 of the 15 factors compared between the two stocks.

About Charlie’s

Charlie's Holdings, Inc., together with its subsidiaries, formulates, markets, and distributes non-combustible nicotine-related, alternative alkaloid vapor, and hemp-derived vapor and edible products. It sells its products through distributors, specialty retailers, and third-party online resellers in the United States, the United Kingdom, Italy, Spain, New Zealand, Australia, and Canada. Charlie's Holdings, Inc. was founded in 2014 and is headquartered in Costa Mesa, California.

About Turning Point Brands

Turning Point Brands, Inc., together with its subsidiaries, manufactures, markets, and distributes branded consumer products. The company operates through three segments: Zig-Zag Products, Stoker’s Products, and Creative Distribution Solutions. Zig-Zag Products segment markets and distributes rolling papers, tubes, finished cigars, make-your-own cigar wraps, and related products, as well as lighters and other accessories under the Zig-Zag brand. The Stoker’s Products segment manufactures and markets moist snuff tobacco and loose-leaf chewing tobacco products under the Stoker’s, Beech-Nut, Durango, Trophy, and Wind River brands. Its Creative Distribution Solutions segment market and distribute other products without tobacco and/or nicotine to individual consumers through VaporFi B2C online platform, as well as non-traditional retail through VaporBeast. In addition, it markets and distributes cannabis accessories and tobacco products. The company sells its products to wholesale distributors and retail merchants in the independent and chain convenience stores, tobacco outlets, food stores, mass merchandising, drug store, and non-traditional retail channels. The company was formerly known as North Atlantic Holding Company, Inc. and changed its name to Turning Point Brands, Inc. in November 2015. Turning Point Brands, Inc. was founded in 1988 and is headquartered in Louisville, Kentucky.