The Michaels Companies (NASDAQ: MIK) and Sally Beauty Holdings (NYSE:SBH) are both mid-cap retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitabiliy, valuation, institutional ownership, dividends, risk and earnings.

Insider and Institutional Ownership

98.4% of The Michaels Companies shares are owned by institutional investors. 1.5% of The Michaels Companies shares are owned by insiders. Comparatively, 1.0% of Sally Beauty Holdings shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for The Michaels Companies and Sally Beauty Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Michaels Companies 0 4 7 0 2.64
Sally Beauty Holdings 1 7 3 0 2.18

The Michaels Companies presently has a consensus price target of $25.83, suggesting a potential upside of 35.82%. Sally Beauty Holdings has a consensus price target of $26.33, suggesting a potential upside of 32.66%. Given The Michaels Companies’ stronger consensus rating and higher probable upside, research analysts plainly believe The Michaels Companies is more favorable than Sally Beauty Holdings.

Risk & Volatility

The Michaels Companies has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, Sally Beauty Holdings has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Profitability

This table compares The Michaels Companies and Sally Beauty Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Michaels Companies 7.30% -22.75% 18.28%
Sally Beauty Holdings 5.92% -84.81% 11.79%

Earnings & Valuation

This table compares The Michaels Companies and Sally Beauty Holdings’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Michaels Companies $5.20 billion 0.69 $800.72 million $1.87 10.17
Sally Beauty Holdings $3.94 billion 0.70 $597.29 million $1.61 12.33

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

Summary

The Michaels Companies beats Sally Beauty Holdings on 12 of the 14 factors compared between the two stocks.

About The Michaels Companies

The Michaels Companies, Inc. (Michaels) is an arts and crafts specialty retailer in North America. The Company’s segments include Michaels-U.S., Michaels-Canada, Aaron Brothers, Pat Catan’s and Darice. As of January 28, 2017, the Company operated 1,223 Michaels retail stores in 49 states and Canada, with approximately 18,000 average square feet of selling space per store. It operated 109 Aaron Brothers stores in nine states, with approximately 5,500 average square feet of selling space and 35 Pat Catan’s stores in five states, with approximately 32,000 average square feet of selling space, as of January 28, 2017. The Company also operates an international wholesale business under the Darice brand name. The Company’s stores purchase custom frames, framing supplies and mats from its framing operation and subsidiary, Artistree, Inc. (Artistree), which consists of a manufacturing facility and four regional processing centers.

About Sally Beauty Holdings

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.

Receive News & Ratings for The Michaels Companies Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for The Michaels Companies Inc. and related companies with MarketBeat.com's FREE daily email newsletter.