Comparing GNC Holdings (GNC) & DAVIDsTEA (DTEA)

GNC Holdings (NYSE: GNC) and DAVIDsTEA (NASDAQ:DTEA) are both small-cap retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Profitability

This table compares GNC Holdings and DAVIDsTEA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GNC Holdings -14.56% 285.93% 4.49%
DAVIDsTEA -3.98% 1.51% 1.19%

Volatility and Risk

GNC Holdings has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, DAVIDsTEA has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

Dividends

GNC Holdings pays an annual dividend of $0.20 per share and has a dividend yield of 2.0%. DAVIDsTEA does not pay a dividend. GNC Holdings pays out -3.8% of its earnings in the form of a dividend. GNC Holdings has increased its dividend for 4 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations and price targets for GNC Holdings and DAVIDsTEA, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GNC Holdings 5 2 0 0 1.29
DAVIDsTEA 1 3 0 0 1.75

GNC Holdings currently has a consensus target price of $8.08, indicating a potential downside of 20.44%. DAVIDsTEA has a consensus target price of $6.75, indicating a potential upside of 28.57%. Given DAVIDsTEA’s stronger consensus rating and higher probable upside, analysts plainly believe DAVIDsTEA is more favorable than GNC Holdings.

Valuation and Earnings

This table compares GNC Holdings and DAVIDsTEA’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
GNC Holdings $2.48 billion 0.28 $278.86 million ($5.30) -1.92
DAVIDsTEA N/A N/A N/A ($0.26) -20.19

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

Insider and Institutional Ownership

65.5% of GNC Holdings shares are held by institutional investors. Comparatively, 16.8% of DAVIDsTEA shares are held by institutional investors. 1.9% of GNC Holdings shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

GNC Holdings beats DAVIDsTEA on 9 of the 14 factors compared between the two stocks.

GNC Holdings Company Profile

GNC Holdings, Inc. is a specialty retailer of health, wellness and performance products, which include protein, performance supplements, weight management supplements, vitamins, herbs and greens, wellness supplements, health and beauty, food and drink and other general merchandise. The Company’s operations consist of purchasing raw materials, formulating and manufacturing products and selling the finished products. It operates in three segments: U.S. and Canada, International and Manufacturing/Wholesale. Its U.S. and Canada segment generates revenues primarily from sales of products to customers at its Company-owned stores in the United States, Canada and Puerto Rico, through its Websites, GNC.com and LuckyVitamin.com. Its International segment generates revenue primarily to its international franchisees. Its Manufacturing/Wholesale segment comprises its manufacturing operations in South Carolina and its wholesale partner relationships.

DAVIDsTEA Company Profile

DAVIDsTEA Inc. is engaged in the retail and online sale of tea, tea accessories, and food and beverages in Canada and in the United States. The Company’s segments include Canada and the U.S. The Company is a branded retailer of specialty tea, offering approximately 150 loose-leaf teas, pre-packaged teas, tea sachets and tea-related gifts, accessories, and food and beverages primarily through approximately 190 DAVIDsTEA stores, which are operated by the Company, and its Website, davidstea.com. Additionally, the Company offers on-the-go tea beverages in its retail stores. The Company’s tea accessories include tea mugs, travel mugs, teacup sets, teapots, tea makers, kettles, infusers, filters, frothers, tins and spoons. The Company offers beverages range from the standard hot or iced tea to its Tea Lattes. The Company’s different flavors of loose-leaf tea span eight tea categories: white, green, oolong, black, pu’erh, mate, rooibos and herbal tea.

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