Lowe’s Companies (NYSE:LOW) vs. Leslie’s (NASDAQ:LESL) Critical Analysis

Leslie’s (NASDAQ:LESL) and Lowe’s Companies (NYSE:LOW) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, dividends, valuation, profitability and analyst recommendations.

Insider and Institutional Ownership

74.1% of Lowe’s Companies shares are held by institutional investors. 0.5% of Leslie’s shares are held by insiders. Comparatively, 0.3% of Lowe’s Companies shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Leslie’s and Lowe’s Companies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Leslie’s	2	4	1	0	1.86
Lowe’s Companies	2	11	23	0	2.58

Leslie’s presently has a consensus target price of $2.85, indicating a potential upside of 370.06%. Lowe’s Companies has a consensus target price of $258.53, indicating a potential upside of 20.45%. Given Leslie’s’ higher probable upside, equities analysts plainly believe Leslie’s is more favorable than Lowe’s Companies.

Profitability

This table compares Leslie’s and Lowe’s Companies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Leslie’s	-21.24%	N/A	-8.96%
Lowe’s Companies	7.34%	-75.67%	12.82%

Volatility and Risk

Leslie’s has a beta of 1.74, suggesting that its share price is 74% more volatile than the S&P 500. Comparatively, Lowe’s Companies has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

Earnings & Valuation

This table compares Leslie’s and Lowe’s Companies”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Leslie’s	$1.24 billion	0.00	-$236.97 million	($27.08)	-0.02
Lowe’s Companies	$86.29 billion	1.39	$6.65 billion	$11.83	18.14

Lowe’s Companies has higher revenue and earnings than Leslie’s. Leslie’s is trading at a lower price-to-earnings ratio than Lowe’s Companies, indicating that it is currently the more affordable of the two stocks.

Summary

Lowe’s Companies beats Leslie’s on 10 of the 14 factors compared between the two stocks.

About Leslie’s

Leslie’s, Inc. operates as a direct-to-consumer pool and spa care brand in the United States. The company markets and sells pool and spa supplies and related products and services. It also offers various pool and spa maintenance items, such as chemicals, equipment and parts, cleaning and maintenance equipment, safety, recreational, and fitness related products. In addition, the company provides installation and repair services for pool and spa equipment. It also sells its products through e-commerce websites and third-party marketplaces. The company offers complimentary, commercial-grade in-store, water testing, and analysis services. It serves the residential, professional, and commercial consumers. Leslie’s, Inc. was founded in 1963 and is based in Phoenix, Arizona.

About Lowe’s Companies

Lowe’s Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States. The company offers a line of products for construction, maintenance, repair, remodeling, and decorating. It also provides home improvement products, such as appliances, seasonal and outdoor living, lawn and garden, lumber, kitchens and bath, tools, paint, millwork, hardware, flooring, rough plumbing, building materials, décor, and electrical. In addition, the company offers installation services through independent contractors in various product categories; and extended protection plans and repair services. It sells its national brand-name merchandise and private brand products to professional customers, homeowners, renters, businesses, and government. The company also sells its products through Lowes.com website; and through mobile applications. Lowe’s Companies, Inc. was founded in 1921 and is based in Mooresville, North Carolina.