Under Armour (UA) and Ralph Lauren (RL) Head-To-Head Analysis

Under Armour (NYSE: UA) and Ralph Lauren (NYSE:RL) are both mid-cap cyclical consumer goods & services companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, dividends, valuation, earnings, profitability, risk and institutional ownership.

Dividends

Ralph Lauren pays an annual dividend of $2.00 per share and has a dividend yield of 1.8%. Under Armour does not pay a dividend. Ralph Lauren pays out 208.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a summary of recent recommendations for Under Armour and Ralph Lauren, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Under Armour 8 10 5 0 1.87
Ralph Lauren 4 10 5 0 2.05

Under Armour presently has a consensus target price of $16.05, suggesting a potential upside of 29.77%. Ralph Lauren has a consensus target price of $88.73, suggesting a potential downside of 19.20%. Given Under Armour’s higher probable upside, equities research analysts plainly believe Under Armour is more favorable than Ralph Lauren.

Valuation and Earnings

This table compares Under Armour and Ralph Lauren’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Under Armour $4.83 billion 1.13 $256.97 million $0.32 38.66
Ralph Lauren $6.65 billion 1.34 -$99.30 million $0.96 114.40

Under Armour has higher earnings, but lower revenue than Ralph Lauren. Under Armour is trading at a lower price-to-earnings ratio than Ralph Lauren, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Under Armour and Ralph Lauren’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Under Armour 2.94% 9.38% 5.23%
Ralph Lauren 1.29% 14.06% 8.26%

Institutional & Insider Ownership

31.8% of Under Armour shares are owned by institutional investors. Comparatively, 66.9% of Ralph Lauren shares are owned by institutional investors. 16.5% of Under Armour shares are owned by company insiders. Comparatively, 32.9% of Ralph Lauren shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Ralph Lauren beats Under Armour on 10 of the 14 factors compared between the two stocks.

Under Armour Company Profile

Under Armour, Inc. is engaged in the development, marketing and distribution of branded performance apparel, footwear and accessories for men, women and youth. The Company’s segments include North America, consisting of the United States and Canada; Europe, the Middle East and Africa (EMEA); Asia-Pacific; Latin America, and Connected Fitness. Its products are sold across the world and worn by athletes at all levels, from youth to professional, on playing fields around the globe, as well as by consumers with active lifestyles. The Company sells its branded apparel, footwear and accessories in North America through its wholesale and direct to consumer channels. As of December 31, 2016, the Company had approximately 151 factory house stores in North America primarily located in outlet centers throughout the United States. In addition, the Company distributes its products in North America through third-party logistics providers with primary locations in Canada, New Jersey and Florida.

Ralph Lauren Company Profile

Ralph Lauren Corporation is engaged in the design, marketing and distribution of lifestyle products, including apparel, accessories, home furnishings and other licensed product categories. The Company operates through three segments: Wholesale, Retail and Licensing. Wholesale business consists of sales made to department stores and specialty stores around the world. Retail business consists of sales made directly to consumers through retail channel, which includes Company’s’ retail stores, concession-based shop-within-shops and e-commerce operations around the world. Licensing business consists of royalty-based arrangements, under which the Company licenses to unrelated third parties for specified periods the right to operate retail stores and/or to use its various trademarks in connection with the manufacture and sale of designated products, such as certain apparel, eyewear, fragrances and home furnishings.

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