Analyzing L Brands (LB) & Lands' End (LE)

L Brands (NYSE: LB) and Lands' End (NASDAQ:LE) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, valuation, risk, institutional ownership, dividends and analyst recommendations.

Profitability

This table compares L Brands and Lands' End’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
L Brands 7.73% -101.19% 11.49%
Lands' End -7.85% 0.55% 0.13%

Insider and Institutional Ownership

78.7% of L Brands shares are owned by institutional investors. Comparatively, 48.2% of Lands' End shares are owned by institutional investors. 16.7% of L Brands shares are owned by insiders. Comparatively, 0.5% of Lands' End shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

L Brands pays an annual dividend of $2.40 per share and has a dividend yield of 4.0%. Lands' End does not pay a dividend. L Brands pays out 72.9% of its earnings in the form of a dividend. Lands' End has raised its dividend for 6 consecutive years.

Valuation & Earnings

This table compares L Brands and Lands' End’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
L Brands $12.57 billion 1.35 $1.16 billion $3.29 18.30
Lands' End $1.34 billion 0.47 -$109.78 million ($3.31) -5.91

L Brands has higher revenue and earnings than Lands' End. Lands' End is trading at a lower price-to-earnings ratio than L Brands, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings for L Brands and Lands' End, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
L Brands 4 18 11 0 2.21
Lands' End 0 1 0 0 2.00

L Brands presently has a consensus target price of $50.69, suggesting a potential downside of 15.83%. Lands' End has a consensus target price of $15.00, suggesting a potential downside of 23.27%. Given L Brands’ stronger consensus rating and higher probable upside, equities analysts clearly believe L Brands is more favorable than Lands' End.

Risk and Volatility

L Brands has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500. Comparatively, Lands' End has a beta of 0.35, suggesting that its stock price is 65% less volatile than the S&P 500.

Summary

L Brands beats Lands' End on 14 of the 17 factors compared between the two stocks.

L Brands Company Profile

L Brands, Inc. operates specialty retail business. The Company is focused on women’s intimate and other apparel, personal care, beauty and home fragrance categories. Its segments include Victoria’s Secret, Bath & Body Works, and Victoria’s Secret and Bath & Body Works International. It sells its merchandise through company-owned specialty retail stores in the United States, Canada, the United Kingdom and Greater China, which are mall-based; through Websites, and through international franchise, license and wholesale partners. It operates in the retail brands, which include Victoria’s Secret, PINK, Bath & Body Works and La Senza. La Senza is a specialty retailer of women’s intimate apparel. It sells its La Senza products at over 120 La Senza stores in Canada. Henri Bendel sells handbags, jewelry and other accessory products through New York and 28 other stores. Mast Global is a merchandise sourcing and production function serving the Company and its international partners.

Lands' End Company Profile

Lands’ End, Inc. (Lands’ End) is a multi-channel retailer of casual clothing, accessories and footwear, as well as home products. The Company operates through two segments: Direct and Retail. The Company offers products through catalogs, online at www.landsend.com. The Direct segment sells products through the Company’s e-commerce Websites, international Websites and direct mail catalogs. The Retail segment sells products and services through Lands’ End Shops at Sears across the United States, the Company’s standalone Lands’ End Inlet stores and international shop-in-shops. The Company’s product categories include Apparel and Non-apparel. The Non-apparel category offers accessories, footwear and home goods. The Company provides embroidery, monogramming, gift wrapping, shipping and other services. In addition, the Company offers sheets and pillowcases, duvet covers and comforters, blankets and throws, mattress pads, towels, rugs and mats, school uniforms and shower curtains.

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