Critical Review: Luxottica Group (LUXTY) & STAAR Surgical (STAA)

Luxottica Group (OTCMKTS: LUXTY) and STAAR Surgical (NASDAQ:STAA) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, institutional ownership, valuation, analyst recommendations and risk.

Earnings and Valuation

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This table compares Luxottica Group and STAAR Surgical’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Luxottica Group $10.35 billion 3.02 $1.17 billion $2.00 32.20
STAAR Surgical $90.61 million 6.49 -$2.13 million $0.01 1,420.00

Luxottica Group has higher revenue and earnings than STAAR Surgical. Luxottica Group is trading at a lower price-to-earnings ratio than STAAR Surgical, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Luxottica Group and STAAR Surgical’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Luxottica Group N/A N/A N/A
STAAR Surgical -2.36% -2.28% -1.34%

Institutional and Insider Ownership

0.5% of Luxottica Group shares are owned by institutional investors. Comparatively, 79.0% of STAAR Surgical shares are owned by institutional investors. 75.0% of Luxottica Group shares are owned by company insiders. Comparatively, 3.4% of STAAR Surgical shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk and Volatility

Luxottica Group has a beta of 0.4, indicating that its stock price is 60% less volatile than the S&P 500. Comparatively, STAAR Surgical has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Luxottica Group and STAAR Surgical, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Luxottica Group 2 0 1 0 1.67
STAAR Surgical 0 0 2 0 3.00

STAAR Surgical has a consensus target price of $20.50, suggesting a potential upside of 44.37%. Given STAAR Surgical’s stronger consensus rating and higher probable upside, analysts clearly believe STAAR Surgical is more favorable than Luxottica Group.

Dividends

Luxottica Group pays an annual dividend of $0.76 per share and has a dividend yield of 1.2%. STAAR Surgical does not pay a dividend. Luxottica Group pays out 38.0% of its earnings in the form of a dividend.

Summary

Luxottica Group beats STAAR Surgical on 8 of the 15 factors compared between the two stocks.

About Luxottica Group

Luxottica Group S.p.A., together with its subsidiaries, provides fashion, luxury, sports, and performance eyewear worldwide. It operates through two segments, Manufacturing and Wholesale Distribution, and Retail Distribution. The Manufacturing and Wholesale Distribution segment engages in the design, manufacture, wholesale distribution, and marketing of proprietary and designer lines of prescription frames and sunglasses, as well as performance optics products. This segment offers its products under proprietary brands, such as Ray-Ban, Oakley, Vogue Eyewear, Persol, Oliver Peoples, Alain Mikli, and Arnette; and licensed brands, including Giorgio Armani, Emporio Armani, Armani Exchange, Brooks Brothers, Burberry, Bulgari, Chanel, Coach, Dolce&Gabbana, DKNY, Michael Kors, Paul Smith Spectacles, Prada, Miu Miu, Ralph Lauren, Polo Ralph Lauren, Ralph, Starck Eyes, Tiffany & Co, Tory Burch, Valentino, Versace, and Ferrari. The Retail Distribution segment operates prescription eyewear stores primarily under its retail brands, including LensCrafters, Sunglass Hut, Pearle Vision, OPSM, Laubman & Pank, GMO, David Clulow, Salmoiraghi & Viganò, Ray-Ban, Oakley, Oliver Peoples and Alain Mikli stores, The Optical Shop of Aspen, and ILORI; and licensed brands, such as Sears Optical and Target Optical. As of May 16, 2017, it owned, operated, and franchised a network of approximately 8,000 stores. The company was founded in 1961 and is headquartered in Milan, Italy. Luxottica Group S.p.A. is a subsidiary of Delfin S.à r.l.

About STAAR Surgical

STAAR Surgical Company designs, develops, manufactures and sells implantable lenses for the eye and delivery systems used to deliver the lenses into the eye. It operates in the ophthalmic surgical market segment. Its principal products are intraocular lenses used in cataract surgery and implantable collamer lenses used in refractive surgery. It makes lenses used across the world in corrective or refractive surgery, and makes lenses for use in surgery that treats cataracts. Its refractive surgery corrects the types of visual disorders that glasses or contact lenses have treated (myopia, hyperopia, astigmatism and presbyopia). Its refractive surgery corrects the types of visual disorders that glasses or contact lenses have treated (myopia, hyperopia, astigmatism and presbyopia). As of December 30, 2016, it sold its products in more than 60 countries, with direct distribution in the United States, Canada, Japan and Spain, and independent distribution in the remainder of the world.

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