Tilly’s (NYSE:TLYS) and Lovesac (NASDAQ:LOVE) Critical Analysis

Tilly’s (NYSE:TLYS) and Lovesac (NASDAQ:LOVE) are both small-cap consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, profitability, valuation, dividends and risk.

Volatility & Risk

Tilly’s has a beta of 0.13, suggesting that its share price is 87% less volatile than the S&P 500. Comparatively, Lovesac has a beta of 2.03, suggesting that its share price is 103% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Tilly’s and Lovesac, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tilly’s	0	2	0	1	2.67
Lovesac	0	1	3	0	2.75

Tilly’s currently has a consensus target price of $5.50, indicating a potential upside of 28.53%. Lovesac has a consensus target price of $21.33, indicating a potential upside of 48.05%. Given Lovesac’s stronger consensus rating and higher probable upside, analysts plainly believe Lovesac is more favorable than Tilly’s.

Insider and Institutional Ownership

76.4% of Tilly’s shares are held by institutional investors. Comparatively, 91.3% of Lovesac shares are held by institutional investors. 26.4% of Tilly’s shares are held by company insiders. Comparatively, 7.8% of Lovesac shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Tilly’s and Lovesac”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tilly’s	$553.59 million	0.24	-$17.45 million	$0.06	71.32
Lovesac	$697.11 million	0.30	$4.07 million	$1.22	11.81

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

Profitability

This table compares Tilly’s and Lovesac’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tilly’s	0.34%	2.37%	0.61%
Lovesac	2.56%	2.57%	1.02%

Summary

Lovesac beats Tilly’s on 12 of the 15 factors compared between the two stocks.

About Tilly’s

Tilly’s, Inc. engages in the retail of casual apparel, footwear, and accessories. Its stores are located in retail centers, including malls, lifestyle centers, power centers, community centers, outlet centers, and street-front locations. The company was founded by Hezy Shaked and Tilly Levine in 1982 and is headquartered in Irvine, CA.

About Lovesac

The Lovesac Company designs, manufactures, and sells furniture. It offers sactionals, such as seats and sides; sacs, including foam beanbag chairs; and other products comprising drink holders, footsac blankets, decorative pillows, fitted seat tables, and ottomans. The company markets its products primarily through www.lovesac.com website, as well as showrooms at top tier malls, lifestyle centers, mobile concierges, kiosks, and street locations in 41 states in the United States; and in store pop-up- shops and shop-in-shops, and barter inventory transactions. The Lovesac Company was founded in 1995 and is based in Stamford, Connecticut.