Head-To-Head Review: Under Armour (UAA) & Ralph Lauren Corporation (RL)

Under Armour (NYSE: UAA) and Ralph Lauren Corporation (NYSE:RL) are both mid-cap consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Dividends

Ralph Lauren Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.2%. Under Armour does not pay a dividend. Ralph Lauren Corporation pays out -869.6% of its earnings in the form of a dividend. Under Armour has raised its dividend for 5 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Under Armour and Ralph Lauren Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Under Armour 12 19 6 0 1.84
Ralph Lauren Corporation 2 12 4 0 2.11

Under Armour currently has a consensus price target of $21.24, suggesting a potential upside of 28.44%. Ralph Lauren Corporation has a consensus price target of $87.15, suggesting a potential downside of 2.20%. Given Under Armour’s higher probable upside, analysts clearly believe Under Armour is more favorable than Ralph Lauren Corporation.

Profitability

This table compares Under Armour and Ralph Lauren Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Under Armour 4.38% 10.93% 5.91%
Ralph Lauren Corporation -0.27% 13.80% 8.14%

Valuation and Earnings

This table compares Under Armour and Ralph Lauren Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Under Armour $4.98 billion 1.46 $526.36 million $0.48 34.46
Ralph Lauren Corporation $6.45 billion 1.12 $987.10 million ($0.23) -387.43

Ralph Lauren Corporation has higher revenue and earnings than Under Armour. Ralph Lauren Corporation is trading at a lower price-to-earnings ratio than Under Armour, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

30.5% of Under Armour shares are owned by institutional investors. Comparatively, 62.9% of Ralph Lauren Corporation shares are owned by institutional investors. 16.4% of Under Armour shares are owned by company insiders. Comparatively, 32.9% of Ralph Lauren Corporation shares are owned 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.

Volatility and Risk

Under Armour has a beta of -0.04, indicating that its share price is 104% less volatile than the S&P 500. Comparatively, Ralph Lauren Corporation has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500.

Summary

Ralph Lauren Corporation beats Under Armour on 10 of the 17 factors compared between the two stocks.

Under Armour Company Profile

Under Armour, Inc. is engaged in the development, marketing and distribution of branded performance apparel, footwear and accessories for men, women and youth. The Company’s segments include North America, consisting of the United States and Canada; Europe, the Middle East and Africa (EMEA); Asia-Pacific; Latin America, and Connected Fitness. Its products are sold across the world and worn by athletes at all levels, from youth to professional, on playing fields around the globe, as well as by consumers with active lifestyles. The Company sells its branded apparel, footwear and accessories in North America through its wholesale and direct to consumer channels. As of December 31, 2016, the Company had approximately 151 factory house stores in North America primarily located in outlet centers throughout the United States. In addition, the Company distributes its products in North America through third-party logistics providers with primary locations in Canada, New Jersey and Florida.

Ralph Lauren Corporation Company Profile

Ralph Lauren Corporation is engaged in the design, marketing and distribution of lifestyle products, including apparel, accessories, home furnishings and other licensed product categories. The Company operates through three segments: Wholesale, Retail and Licensing. Wholesale business consists of sales made to department stores and specialty stores around the world. Retail business consists of sales made directly to consumers through retail channel, which includes Company’s’ retail stores, concession-based shop-within-shops and e-commerce operations around the world. Licensing business consists of royalty-based arrangements, under which the Company licenses to unrelated third parties for specified periods the right to operate retail stores and/or to use its various trademarks in connection with the manufacture and sale of designated products, such as certain apparel, eyewear, fragrances and home furnishings.

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