Sally Beauty (NYSE:SBH – Get Free Report) and Lulu’s Fashion Lounge (NASDAQ:LVLU – Get Free Report) are both small-cap consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, institutional ownership, risk, earnings, profitability, analyst recommendations and valuation.
Profitability
This table compares Sally Beauty and Lulu’s Fashion Lounge’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Sally Beauty | 5.16% | 24.36% | 7.07% |
| Lulu’s Fashion Lounge | -3.17% | -946.15% | -8.73% |
Analyst Recommendations
This is a breakdown of recent ratings and target prices for Sally Beauty and Lulu’s Fashion Lounge, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sally Beauty | 1 | 2 | 2 | 1 | 2.50 |
| Lulu’s Fashion Lounge | 1 | 0 | 0 | 0 | 1.00 |
Sally Beauty currently has a consensus target price of $17.40, indicating a potential downside of 12.67%. Given Sally Beauty’s stronger consensus rating and higher possible upside, analysts clearly believe Sally Beauty is more favorable than Lulu’s Fashion Lounge.
Insider & Institutional Ownership
73.8% of Lulu’s Fashion Lounge shares are owned by institutional investors. 2.0% of Sally Beauty shares are owned by insiders. Comparatively, 7.8% of Lulu’s Fashion Lounge shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares Sally Beauty and Lulu’s Fashion Lounge”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Sally Beauty | $3.70 billion | 0.50 | $195.88 million | $1.92 | 10.38 |
| Lulu’s Fashion Lounge | $282.28 million | 0.11 | -$13.71 million | ($2.94) | -3.79 |
Sally Beauty has higher revenue and earnings than Lulu’s Fashion Lounge. Lulu’s Fashion Lounge is trading at a lower price-to-earnings ratio than Sally Beauty, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Sally Beauty has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500. Comparatively, Lulu’s Fashion Lounge has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500.
Summary
Sally Beauty beats Lulu’s Fashion Lounge on 13 of the 15 factors compared between the two stocks.
About Sally Beauty
Sally Beauty Holdings, Inc. operates as a specialty retailer and distributor of professional beauty supplies. The company operates through two segments, Sally Beauty Supply and Beauty Systems Group. The Sally Beauty Supply segment offers beauty products, including hair color and care products, skin and nail care products, styling tools, and other beauty products for retail customers, salons, and salon professionals. This segment also provides products under Wella and L'Oreal brands. The Beauty Systems Group segment offers professional beauty products, such as hair color and care products, skin and nail care products, styling tools, and other beauty items directly to salons and salon professionals through its professional-only stores, e-commerce platforms, and sales force, as well as through franchised stores under the Armstrong McCall store name. This segment also sells products under Paul Mitchell and Wella brands. It operates stores and franchised units in the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain, and Germany. The company distributes its products through full-service/exclusive distributors and open-line distributors. Sally Beauty Holdings, Inc. was founded in 1964 and is headquartered in Denton, Texas.
About Lulu’s Fashion Lounge
Lulu’s Fashion Lounge Holdings, Inc. engages in providing an online website for clothing. It offers retailing of women’s clothing, shoes, and accessories. The company was founded in 1996 and is headquartered in Chico, CA.
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