Tilly’s (NYSE: TLYS) and Xcel Brands (NASDAQ:XELB) are both small-cap retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, profitability and risk.

Insider and Institutional Ownership

39.6% of Tilly’s shares are owned by institutional investors. Comparatively, 23.0% of Xcel Brands shares are owned by institutional investors. 53.4% of Tilly’s shares are owned by insiders. Comparatively, 62.2% of Xcel Brands shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Tilly’s and Xcel Brands, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tilly’s 0 3 3 0 2.50
Xcel Brands 0 0 1 0 3.00

Tilly’s currently has a consensus target price of $10.83, suggesting a potential upside of 18.27%. Xcel Brands has a consensus target price of $4.50, suggesting a potential upside of 5.88%. Given Tilly’s’ higher possible upside, equities analysts plainly believe Tilly’s is more favorable than Xcel Brands.

Valuation and Earnings

This table compares Tilly’s and Xcel Brands’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Tilly’s $569.68 million 0.46 $47.93 million $0.48 19.08
Xcel Brands $32.08 million 2.45 $4.00 million $0.14 30.36

Tilly’s has higher revenue and earnings than Xcel Brands. Tilly’s is trading at a lower price-to-earnings ratio than Xcel Brands, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Tilly’s has a beta of -0.43, suggesting that its share price is 143% less volatile than the S&P 500. Comparatively, Xcel Brands has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Profitability

This table compares Tilly’s and Xcel Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tilly’s 2.46% 7.86% 4.91%
Xcel Brands 8.38% 1.00% 0.70%

Summary

Tilly’s beats Xcel Brands on 8 of the 14 factors compared between the two stocks.

Tilly’s Company Profile

Tilly’s, Inc. is a destination specialty retailer of casual apparel, footwear and accessories for young men, young women, boys and girls. The Company offers an unparalleled selection of relevant brands, styles, colors, sizes and price points. The Company’s apparel merchandise includes branded, fashion and styles for tops, outerwear, bottoms and dresses. Its accessories merchandise includes backpacks, hats, sunglasses, headphones, handbags, watches, jewelry and others. The Company offers its products through stores and Website. The Company operates over 220 stores in approximately 30 states. The Company’s stores are located in malls, lifestyle centers, power centers, community centers, outlet centers and street-front locations. The Company also operates an e-commerce platform for desktop and mobile. The Company’s third-party brands include AYC, Adidas, Billabong, Converse, Hurley, Nixon, JanSport, LRG and Stance, among others.

Xcel Brands Company Profile

Xcel Brands, Inc. is a brand development and media company. The Company is engaged in the design, production, licensing, marketing, and direct to consumer sales of branded apparel, footwear, accessories, jewelry, home goods, and other consumer products, and the acquisition of consumer lifestyle brands. The Company’s brand portfolio consists of the Isaac Mizrahi, Judith Ripka, H Halston, C Wonder and Highline Collective brands. The Company also manages and designs the Liz Claiborne New York brand (LCNY Brand). Isaac Mizrahi has over 150 different product categories, including sportswear, footwear, handbags, watches, eyewear, fragrance, tech accessories, intimates, bridal gowns and accessories, pet products, home and other merchandise. The Company’s Judith Ripka is a luxury jewelry brand. Wonder brand offers women’s clothing, footwear, jewelry and accessories; housewares, and home decor and gifts. The Liz Claiborne New York includes women’s apparel, footwear, outerwear and accessories.

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