Gaia (NASDAQ: GAIA) and Party City Holdco (NYSE:PRTY) 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 analyst recommendations, institutional ownership, profitability, earnings, dividends, risk and valuation.

Analyst Recommendations

This is a breakdown of recent ratings for Gaia and Party City Holdco, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gaia 0 0 1 0 3.00
Party City Holdco 0 2 2 0 2.50

Gaia presently has a consensus price target of $17.00, suggesting a potential upside of 50.44%. Party City Holdco has a consensus price target of $17.33, suggesting a potential upside of 22.93%. Given Gaia’s stronger consensus rating and higher probable upside, analysts plainly believe Gaia is more favorable than Party City Holdco.

Profitability

This table compares Gaia and Party City Holdco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gaia 392.56% -17.07% -15.46%
Party City Holdco 4.97% 13.97% 4.09%

Institutional and Insider Ownership

31.6% of Gaia shares are held by institutional investors. Comparatively, 100.0% of Party City Holdco shares are held by institutional investors. 42.8% of Gaia shares are held by company insiders. Comparatively, 5.0% of Party City Holdco shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Gaia and Party City Holdco’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Gaia $21.56 million 7.94 -$18.78 million $5.59 2.02
Party City Holdco $2.33 billion 0.72 $364.88 million $0.96 14.69

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

Volatility & Risk

Gaia has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500. Comparatively, Party City Holdco has a beta of 2.69, indicating that its stock price is 169% more volatile than the S&P 500.

Summary

Party City Holdco beats Gaia on 8 of the 14 factors compared between the two stocks.

Gaia Company Profile

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.

Party City Holdco Company Profile

Party City Holdco Inc. is a holding company with no operating assets or operations. As of December 31, 2016, the Company owned PC Nextco Holdings, LLC (PC Nextco), which owned PC Intermediate Holdings, Inc. (PC Intermediate). As of December 31, 2016, PC Intermediate owned Party City Holdings Inc. (PCHI). PCHI or its direct or indirect subsidiaries conduct all of its operating businesses. The Company operates through two segments: Retail and Wholesale. Its retail operations generate revenue primarily through the sale of its Amscan, Designware, Anagram and Costumes USA party supplies through its Party City stores, Halloween City stores and PartyCity.com. Its wholesale revenues are generated from the sale of party goods for all occasions, including paper and plastic tableware, accessories and novelties, costumes, metallic and latex balloons and stationery.

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