Differential Brands Group (DFBG) versus lululemon athletica inc. (LULU) Critical Analysis

Differential Brands Group (NASDAQ: DFBG) and lululemon athletica inc. (NASDAQ:LULU) are both consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.

Valuation & Earnings

This table compares Differential Brands Group and lululemon athletica inc.’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Differential Brands Group	$159.73 million	0.14	$4.56 million	($1.07)	-1.54
lululemon athletica inc.	$2.37 billion	3.22	$507.41 million	$2.11	28.54

lululemon athletica inc. has higher revenue and earnings than Differential Brands Group. Differential Brands Group is trading at a lower price-to-earnings ratio than lululemon athletica inc., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Differential Brands Group and lululemon athletica inc.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Differential Brands Group	-8.85%	-29.02%	-7.53%
lululemon athletica inc.	12.21%	23.43%	19.27%

Risk & Volatility

Differential Brands Group has a beta of -1.72, suggesting that its stock price is 272% less volatile than the S&P 500. Comparatively, lululemon athletica inc. has a beta of 0.25, suggesting that its stock price is 75% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Differential Brands Group and lululemon athletica inc., as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Differential Brands Group	0	0	1	0	3.00
lululemon athletica inc.	3	16	18	0	2.41

Differential Brands Group presently has a consensus price target of $5.00, indicating a potential upside of 203.03%. lululemon athletica inc. has a consensus price target of $65.63, indicating a potential upside of 9.00%. Given Differential Brands Group’s stronger consensus rating and higher possible upside, equities analysts plainly believe Differential Brands Group is more favorable than lululemon athletica inc..

Institutional and Insider Ownership

1.6% of Differential Brands Group shares are owned by institutional investors. Comparatively, 79.6% of lululemon athletica inc. shares are owned by institutional investors. 62.5% of Differential Brands Group shares are owned by company insiders. Comparatively, 0.3% of lululemon athletica inc. shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

lululemon athletica inc. beats Differential Brands Group on 10 of the 13 factors compared between the two stocks.

Differential Brands Group Company Profile

Differential Brands Group Inc., formerly Joe’s Jeans Inc., is engaged in the design, development and marketing of apparel products, which include denim jeans, related casual wear and accessories. The Company offers its products under various brands, such as Hudson, Robert Graham and SWIMS. Its segments are Wholesale and Retail. Its Wholesale segment consists of sales of Hudson products to retailers, specialty stores and international distributors. Its Retail segment consists of sales of its products to consumers through its retail Internet sites for Hudson products. The Hudson product line includes women’s, men’s and children’s denim jeans, pants and other bottoms. The Robert Graham product line includes men’s sport shirts, pants, sweaters, knits, t-shirts, sportcoats, outerwear and swimwear. Through SWIMS brand, it distributes a range of footwear, swimwear, outerwear, ready-to-wear and accessories across the world through department stores, independent specialty and luxury resorts.

lululemon athletica inc. Company Profile

lululemon athletica inc. is a designer, distributor and retailer of athletic apparel. The Company operates through two segments: Company-operated stores and Direct to consumer. It is also engaged in the sale from outlets, showrooms, sales from temporary locations, sales to wholesale accounts, warehouse sales, and license and supply arrangements. Its direct to consumer segment generates revenue from its lululemon and ivivva e-commerce Websites, www.lululemon.com and www.ivivva.com, and other country and region specific Websites. It offers a range of apparel and accessories for women, men and female youth. The Company’s apparel assortment includes items, such as pants, shorts, tops, and jackets designed for healthy lifestyle and athletic activities, such as yoga, running, training, most other sweaty pursuits, and athletic wear for female youth. The Company also offers fitness-related accessories, including an array of items, such as bags, socks, underwear, yoga mats and water bottles.