Critical Contrast: Lands' End (LE) vs. L Brands (LB)

Lands' End (NASDAQ: LE) and L Brands (NYSE:LB) are both retail/wholesale companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Profitability

This table compares Lands' End and L Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lands' End -7.85% 0.55% 0.13%
L Brands 7.73% -101.19% 11.49%

Volatility and Risk

Lands' End has a beta of 0.35, suggesting that its share price is 65% less volatile than the S&P 500. Comparatively, L Brands has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Earnings and Valuation

This table compares Lands' End and L Brands’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lands' End $1.34 billion 0.47 -$109.78 million ($3.31) -5.94
L Brands $12.57 billion 1.14 $1.16 billion $3.28 15.45

L Brands has higher revenue and earnings than Lands' End. Lands' End is trading at a lower price-to-earnings ratio than L Brands, indicating that it is currently the more affordable of the two stocks.

Dividends

L Brands pays an annual dividend of $2.40 per share and has a dividend yield of 4.7%. Lands' End does not pay a dividend. L Brands pays out 73.2% of its earnings in the form of a dividend.

Insider and Institutional Ownership

48.2% of Lands' End shares are owned by institutional investors. Comparatively, 78.8% of L Brands shares are owned by institutional investors. 0.5% of Lands' End shares are owned by company insiders. Comparatively, 16.7% of L Brands shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings for Lands' End and L Brands, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lands' End 0 1 0 0 2.00
L Brands 4 17 12 0 2.24

Lands' End presently has a consensus price target of $15.00, indicating a potential downside of 23.66%. L Brands has a consensus price target of $51.94, indicating a potential upside of 2.46%. Given L Brands’ stronger consensus rating and higher probable upside, analysts plainly believe L Brands is more favorable than Lands' End.

Summary

L Brands beats Lands' End on 14 of the 16 factors compared between the two stocks.

About Lands' End

Lands’ End, Inc. (Lands’ End) is a multi-channel retailer of casual clothing, accessories and footwear, as well as home products. The Company operates through two segments: Direct and Retail. The Company offers products through catalogs, online at www.landsend.com. The Direct segment sells products through the Company’s e-commerce Websites, international Websites and direct mail catalogs. The Retail segment sells products and services through Lands’ End Shops at Sears across the United States, the Company’s standalone Lands’ End Inlet stores and international shop-in-shops. The Company’s product categories include Apparel and Non-apparel. The Non-apparel category offers accessories, footwear and home goods. The Company provides embroidery, monogramming, gift wrapping, shipping and other services. In addition, the Company offers sheets and pillowcases, duvet covers and comforters, blankets and throws, mattress pads, towels, rugs and mats, school uniforms and shower curtains.

About L Brands

L Brands, Inc. operates specialty retail business. The Company is focused on women’s intimate and other apparel, personal care, beauty and home fragrance categories. Its segments include Victoria’s Secret, Bath & Body Works, and Victoria’s Secret and Bath & Body Works International. It sells its merchandise through company-owned specialty retail stores in the United States, Canada, the United Kingdom and Greater China, which are mall-based; through Websites, and through international franchise, license and wholesale partners. It operates in the retail brands, which include Victoria’s Secret, PINK, Bath & Body Works and La Senza. La Senza is a specialty retailer of women’s intimate apparel. It sells its La Senza products at over 120 La Senza stores in Canada. Henri Bendel sells handbags, jewelry and other accessory products through New York and 28 other stores. Mast Global is a merchandise sourcing and production function serving the Company and its international partners.

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