Analyzing Fred’s (OTCMKTS:FREDQ) & SEA (NYSE:SE)

Fred’s (OTCMKTS:FREDQ) and SEA (NYSE:SE) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Institutional and Insider Ownership

59.5% of SEA shares are owned by institutional investors. 27.2% of Fred’s shares are owned by insiders. Comparatively, 0.2% of SEA shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Fred’s and SEA’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fred’s	N/A	N/A	N/A
SEA	5.98%	13.54%	5.59%

Analyst Ratings

This is a breakdown of recent recommendations for Fred’s and SEA, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fred’s	0	0	0	0	0.00
SEA	1	3	8	1	2.69

SEA has a consensus target price of $151.90, indicating a potential upside of 28.20%. Given SEA’s stronger consensus rating and higher possible upside, analysts plainly believe SEA is more favorable than Fred’s.

Earnings and Valuation

This table compares Fred’s and SEA”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fred’s	N/A	N/A	N/A	N/A	N/A
SEA	$22.94 billion	3.16	$1.58 billion	$2.59	45.75

SEA has higher revenue and earnings than Fred’s.

Summary

SEA beats Fred’s on 9 of the 10 factors compared between the two stocks.

About Fred’s

Fred's, Inc., together with its subsidiaries, sells general merchandise through its retail discount stores and full service pharmacies. The company, through its stores, offers health, beauty, and personal care products; household cleaning supplies, disposable diapers, pet foods, and paper products; and various general merchandise, and food and beverage products to low, middle, and fixed income families located in small- to medium-sized towns. It also sells general merchandise to franchised Fred's stores. As of February 3, 2018, the company operated approximately 584 retail stores, 348 pharmacies, and 12 franchised stores located in 15 states primarily in the Southeastern United States. Fred's, Inc. was founded in 1947 and is headquartered in Memphis, Tennessee.

About SEA

Sea Ltd. is an internet and mobile platform company, which engages in the provision of online gaming services. It operates through the following segments: Digital Entertainment, E-Commerce, and Digital Financial Services. The Digital Entertainment segment offers and develops mobile and PC online games. The E-Commerce segment manages a third-party marketplace through the Shopee mobile app and websites that connect buyers and sellers. The Digital Financial Services segment includes a variety of payment services and loans to individuals and businesses through SeaMoney. Sea was founded by Xiao Dong Li, Gang Ye, and Jing Ye Chen on May 8, 2009 and is headquartered in Singapore.