Ross Stores (NASDAQ: ROST) and Francesca's (NASDAQ:FRAN) are both cyclical consumer goods & services companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, dividends, institutional ownership, risk and profitability.

Risk and Volatility

Ross Stores has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Francesca's has a beta of 0.23, suggesting that its stock price is 77% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Ross Stores and Francesca's, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ross Stores 0 7 15 0 2.68
Francesca's 0 6 1 0 2.14

Ross Stores presently has a consensus target price of $74.53, indicating a potential downside of 9.73%. Francesca's has a consensus target price of $10.67, indicating a potential upside of 90.82%. Given Francesca's’ higher possible upside, analysts clearly believe Francesca's is more favorable than Ross Stores.

Valuation and Earnings

This table compares Ross Stores and Francesca's’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ross Stores $12.87 billion 2.45 $1.12 billion $3.13 26.38
Francesca's $487.19 million 0.42 $42.00 million $0.71 7.87

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

Profitability

This table compares Ross Stores and Francesca's’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ross Stores 8.93% 43.21% 21.90%
Francesca's 5.52% 23.19% 13.64%

Dividends

Ross Stores pays an annual dividend of $0.64 per share and has a dividend yield of 0.8%. Francesca's does not pay a dividend. Ross Stores pays out 20.4% of its earnings in the form of a dividend. Ross Stores has raised its dividend for 11 consecutive years.

Institutional & Insider Ownership

91.4% of Ross Stores shares are owned by institutional investors. 2.3% of Ross Stores shares are owned by insiders. Comparatively, 1.2% of Francesca's shares are owned by 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

Ross Stores beats Francesca's on 15 of the 17 factors compared between the two stocks.

Ross Stores Company Profile

Ross Stores, Inc. and its subsidiaries operate two brands of off-price retail apparel and home fashion stores-Ross Dress for Less (Ross) and dd’s DISCOUNTS. The Company is the off-price apparel and home fashion chain in the United States, with 1,340 locations in 36 states, the District of Columbia and Guam, as of January 28, 2017. The Company offers in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operated 193 dd’s DISCOUNTS stores in 15 states as of January 28, 2017. As of January 28, 2017, the Company operated a total of 1,533 stores consisted of 1,340 Ross stores and 193 dd’s DISCOUNTS stores. As of January 28, 2017, the Company owned and operated six distribution processing facilities-three in California, one in Pennsylvania, and two in South Carolina.

Francesca's Company Profile

Francesca’s Holdings Corporation is a holding company. The Company is a specialty retailer, which operates a chain of boutiques across the United States. The Company offers a mix of apparel, jewelry, accessories and gifts. As of January 28, 2017, the Company operated 671 boutiques in 48 states and the District of Columbia, and also served its customers through www.francescas.com, its e-commerce Website. The Company offers apparel, such as dresses, fashion tops, sweaters, cardigans and wraps, bottoms, outerwear and jackets, tees and tanks, and intimates. The Company provides jewelry, such as necklaces, earrings, bracelets and rings. The Company offers accessories, such as handbags, clutches, wallets, shoes, belts, hats, scarves, sunglasses, watches and hair accessories. The Company provides gifts, such as fragrance, candles, bath and body, home accessories, books, wall art, nail polish and miscellaneous items. The Company operates its boutiques under the francesca’s brand.

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