Critical Review: Sportsman’s Warehouse (NASDAQ:SPWH) and Children’s Place (NASDAQ:PLCE)

Sportsman’s Warehouse (NASDAQ:SPWH) and Children’s Place (NASDAQ:PLCE) are both small-cap retail/wholesale companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, dividends, analyst recommendations, earnings and profitability.

Volatility & Risk

Sportsman’s Warehouse has a beta of 0.46, suggesting that its stock price is 54% less volatile than the S&P 500. Comparatively, Children’s Place has a beta of 2.01, suggesting that its stock price is 101% more volatile than the S&P 500.

Profitability

This table compares Sportsman’s Warehouse and Children’s Place’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sportsman’s Warehouse	-4.14%	-10.30%	-2.38%
Children’s Place	-4.01%	N/A	-6.44%

Institutional & Insider Ownership

83.0% of Sportsman’s Warehouse shares are held by institutional investors. 1.8% of Sportsman’s Warehouse shares are held by insiders. Comparatively, 0.6% of Children’s Place shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for Sportsman’s Warehouse and Children’s Place, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sportsman’s Warehouse	1	1	3	0	2.40
Children’s Place	1	1	0	0	1.50

Sportsman’s Warehouse currently has a consensus target price of $2.94, indicating a potential upside of 105.42%. Children’s Place has a consensus target price of $4.50, indicating a potential upside of 33.53%. Given Sportsman’s Warehouse’s stronger consensus rating and higher possible upside, research analysts plainly believe Sportsman’s Warehouse is more favorable than Children’s Place.

Earnings and Valuation

This table compares Sportsman’s Warehouse and Children’s Place”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sportsman’s Warehouse	$1.21 billion	0.05	-$33.06 million	($1.30)	-1.10
Children’s Place	$1.29 billion	0.06	-$57.82 million	($2.62)	-1.29

Sportsman’s Warehouse has higher earnings, but lower revenue than Children’s Place. Children’s Place is trading at a lower price-to-earnings ratio than Sportsman’s Warehouse, indicating that it is currently the more affordable of the two stocks.

Summary

Sportsman’s Warehouse beats Children’s Place on 9 of the 14 factors compared between the two stocks.

About Sportsman’s Warehouse

Sportsman’s Warehouse Holdings, Inc. engages in the retail of sporting and athletic goods. Its products include hunting and shooting, archery, fishing, camping, boating accessories, optics and electronics, knives and tools, and footwear. The company was founded in 1986 and is headquartered in West Jordan, UT.

About Children’s Place

The Children’s Place, Inc. engages in the provision of apparel, footwear, accessories, and other items for children. The firm also designs contracts to manufacture and sell fashionable and value-priced merchandise under the brand names of The Children’s Place, Baby Place, and Gymboree. It operates through The Children’s Place U.S. and The Children’s Place International segments. The Children’s Place U.S. segment refers to the company’s U.S. and Puerto Rico-based stores and revenue from its U.S. based wholesale business. The Children’s Place International segment is involved in the Canadian-based stores, revenue from the company’s Canadian-based wholesale business, as well as revenue from international franchisees. The company was founded by David Pulver and Clinton A. Clark in 1969 and is headquartered in Secaucus, NJ.