Gaia (NASDAQ: GAIA) and West Marine (NASDAQ:WMAR) are both small-cap consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitabiliy, dividends, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations and price targets for Gaia and West Marine, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gaia 0 0 1 0 3.00
West Marine 1 1 1 0 2.00

Gaia currently has a consensus target price of $17.00, suggesting a potential upside of 53.15%. West Marine has a consensus target price of $9.67, suggesting a potential downside of 3.24%. Given Gaia’s stronger consensus rating and higher possible upside, analysts plainly believe Gaia is more favorable than West Marine.

Earnings & Valuation

This table compares Gaia and West Marine’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Gaia $19.20 million 8.76 -$15.54 million $5.91 1.88
West Marine $702.03 million 0.36 $37.73 million $0.33 30.27

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

Dividends

West Marine pays an annual dividend of $0.20 per share and has a dividend yield of 2.0%. Gaia does not pay a dividend. West Marine pays out 60.6% of its earnings in the form of a dividend.

Risk & Volatility

Gaia has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, West Marine has a beta of 1.4, indicating that its stock price is 40% more volatile than the S&P 500.

Institutional & Insider Ownership

31.2% of Gaia shares are held by institutional investors. Comparatively, 59.9% of West Marine shares are held by institutional investors. 42.8% of Gaia shares are held by company insiders. Comparatively, 27.5% of West Marine shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Gaia and West Marine’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gaia 460.97% -13.94% -12.48%
West Marine 1.19% 2.70% 1.93%

About Gaia

Gaia, Inc., formerly Gaiam, Inc., is engaged in providing global digital video subscription service. The Company is a global digital video streaming service and online community delivering curated media to its subscribers in over 120 countries. It provides its members access to approximately 7,000 video titles. Its video content is available to its subscribers through online digital streaming on virtually any Internet-connected device on a commercial-free basis. In addition to streaming, the Company’s subscribers can download its video content to their devices, so they can view its content without being actively connected to the Internet. Through the Gaia service, the Company’s subscribers have access to a library of inspiring films, personal growth-related content, documentaries, interviews, yoga classes and fitness. The Company has also created a fitness and yoga-focused version of its video service. The Company also operates a digital versatile disc (DVD) subscription club.

About West Marine

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.

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