Analyzing Guess? (GES) and Nike (NKE)

Guess? (NYSE: GES) and Nike (NYSE:NKE) are both consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, profitability, earnings, analyst recommendations, institutional ownership, dividends and valuation.

Earnings & Valuation

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This table compares Guess? and Nike’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Guess? $2.36 billion 0.72 $22.76 million ($0.11) -189.27
Nike $34.35 billion 3.15 $4.24 billion $2.31 28.77

Nike has higher revenue and earnings than Guess?. Guess? is trading at a lower price-to-earnings ratio than Nike, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Guess? and Nike’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Guess? -0.33% 6.15% 3.81%
Nike 11.13% 31.64% 16.43%

Insider & Institutional Ownership

82.4% of Guess? shares are owned by institutional investors. Comparatively, 65.7% of Nike shares are owned by institutional investors. 29.6% of Guess? shares are owned by company insiders. Comparatively, 3.9% of Nike shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Guess? has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500. Comparatively, Nike has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500.

Dividends

Guess? pays an annual dividend of $0.90 per share and has a dividend yield of 4.3%. Nike pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Guess? pays out -818.2% of its earnings in the form of a dividend. Nike pays out 34.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Guess? is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current recommendations and price targets for Guess? and Nike, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Guess? 0 4 4 0 2.50
Nike 1 14 22 0 2.57

Guess? presently has a consensus price target of $16.99, indicating a potential downside of 18.41%. Nike has a consensus price target of $66.90, indicating a potential upside of 0.67%. Given Nike’s stronger consensus rating and higher probable upside, analysts clearly believe Nike is more favorable than Guess?.

Summary

Nike beats Guess? on 12 of the 16 factors compared between the two stocks.

About Guess?

Guess?, Inc. designs, markets, distributes and licenses a lifestyle collections of apparel and accessories for men, women and children. The Company operates through five segments: Americas Retail, Europe, Asia, Americas Wholesale and Licensing. The Americas Retail segment includes the Company’s retail and e-commerce operations in North and Central America and its retail operations in South America. The Europe segment includes the Company’s retail, e-commerce and wholesale operations in Europe and the Middle East. The Asia segment includes the Company’s retail, e-commerce and wholesale operations in Asia. The Asia segment includes the Company’s retail, e-commerce and wholesale operations in Asia. The Licensing segment includes the around the world licensing operations of the Company. Its apparel is marketed under various names, including GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, MARCIANO, Question Mark and Triangle Design, GUESS Kids, Baby GUESS, YES, G by GUESS and GUESS by MARCIANO.

About Nike

NIKE, Inc., together with its subsidiaries, designs, develops, markets, and sells athletic footwear, apparel, equipment, and accessories worldwide. It offers NIKE brand products in nine categories: running, NIKE basketball, the Jordan brand, football, men's training, women's training, action sports, sportswear, and golf. The company also markets products designed for kids, as well as for other athletic and recreational uses, such as cricket, lacrosse, tennis, volleyball, wrestling, walking, and outdoor activities. In addition, it sells sports apparel; and markets apparel with licensed college and professional team and league logos. Further, the company sells a line of performance equipment, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment, and other equipment under the NIKE brand for sports activities; various plastic products to other manufacturers; athletic and casual footwear, apparel, and accessories under the Jumpman trademark; action sports and youth lifestyle apparel and accessories under the Hurley trademark; and casual sneakers, apparel, and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron, and Jack Purcell trademarks. Additionally, it licenses agreements that permit unaffiliated parties to manufacture and sell apparel, digital devices, and applications and other equipment for sports activities under NIKE-owned trademarks. The company sells its products to footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, tennis and golf shops, and other retail accounts through NIKE-owned retail stores and Internet Websites, mobile applications, independent distributors, and licensees. The company was formerly known as Blue Ribbon Sports, Inc. and changed its name to NIKE, Inc. in 1971. NIKE, Inc. was founded in 1964 and is headquartered in Beaverton, Oregon.

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