West Marine (NASDAQ: WMAR) and Sally Beauty Holdings (NYSE:SBH) are both consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, risk, profitability, valuation and earnings.

Profitability

This table compares West Marine and Sally Beauty Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
West Marine 1.15% 2.56% 1.83%
Sally Beauty Holdings 5.89% -80.60% 11.83%

Risk & Volatility

West Marine has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500. Comparatively, Sally Beauty Holdings has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for West Marine and Sally Beauty Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
West Marine 0 3 0 0 2.00
Sally Beauty Holdings 1 7 3 0 2.18

West Marine presently has a consensus target price of $9.99, suggesting a potential downside of 22.68%. Sally Beauty Holdings has a consensus target price of $25.00, suggesting a potential upside of 28.73%. Given Sally Beauty Holdings’ stronger consensus rating and higher probable upside, analysts clearly believe Sally Beauty Holdings is more favorable than West Marine.

Insider & Institutional Ownership

60.7% of West Marine shares are held by institutional investors. 27.5% of West Marine shares are held by company insiders. Comparatively, 1.0% of Sally Beauty Holdings shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

West Marine pays an annual dividend of $0.20 per share and has a dividend yield of 1.5%. Sally Beauty Holdings does not pay a dividend. West Marine pays out 64.5% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares West Marine and Sally Beauty Holdings’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
West Marine $697.67 million 0.47 $39.13 million $0.31 41.68
Sally Beauty Holdings $3.94 billion 0.65 $603.02 million $1.64 11.84

Sally Beauty Holdings has higher revenue and earnings than West Marine. Sally Beauty Holdings is trading at a lower price-to-earnings ratio than West Marine, indicating that it is currently the more affordable of the two stocks.

Summary

Sally Beauty Holdings beats West Marine on 10 of the 16 factors compared between the two stocks.

West Marine Company Profile

West Marine, Inc. is a waterlife outfitter for cruisers, sailors, anglers and paddlesports enthusiasts. The Company offers a selection of core boating and water recreation products, primarily serving the needs of boat owners and professionals providing services to them. It services its customers through physical stores and two e-commerce Websites. It is a specialty retailer of boating supplies, gear, apparel, footwear and other waterlife-related products. It operates approximately 260 stores located in approximately 40 states, Puerto Rico and Canada. Its products include boating products and merchandise expansion products. Its boating products include maintenance, electronics, sailboat hardware, anchors/docking/moorings, engine systems, boats/outboards, ventilation, navigation, trailering, seating/boat covers and barbecues/appliances. Its merchandise expansion products include clothing accessories, fishing, watersports, paddlesports, coolers and waterlife lifestyle accessories.

Sally Beauty Holdings Company Profile

Sally Beauty Holdings, Inc. is an international specialty retailer and distributor of professional beauty supplies with operations primarily in North America, South America and Europe. The Company operates through two business segments: Sally Beauty Supply and Beauty Systems Group (BSG). Sally Beauty Supply is a domestic and international chain of cash and carry retail stores, which offers professional beauty supplies to both salon professionals and retail customers primarily in North America, Puerto Rico, and parts of Europe and South America. BSG, including its franchise-based business Armstrong McCall, is a full service beauty supply distributor, which offers professional brands of beauty products directly to salons and salon professionals through its own sales force and professional-only stores (including franchise stores) in partially exclusive geographical territories in North America and parts of Europe.

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