L Brands (NYSE: LB) and Ascena Retail Group (NASDAQ:ASNA) are both retail/wholesale companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, dividends, analyst recommendations, profitability, risk, institutional ownership and valuation.

Earnings & Valuation

This table compares L Brands and Ascena Retail Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
L Brands $12.26 billion 0.87 $2.37 billion $3.41 10.88
Ascena Retail Group $6.80 billion 0.06 $581.10 million ($5.33) -0.37

L Brands has higher revenue and earnings than Ascena Retail Group. Ascena Retail Group is trading at a lower price-to-earnings ratio than L Brands, indicating that it is currently the more affordable of the two stocks.

Dividends

L Brands pays an annual dividend of $2.40 per share and has a dividend yield of 6.5%. Ascena Retail Group does not pay a dividend. L Brands pays out 70.4% of its earnings in the form of a dividend. Ascena Retail Group has raised its dividend for 6 consecutive years.

Risk and Volatility

L Brands has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500. Comparatively, Ascena Retail Group has a beta of 1.91, meaning that its stock price is 91% more volatile than the S&P 500.

Profitability

This table compares L Brands and Ascena Retail Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
L Brands 8.04% -103.18% 12.00%
Ascena Retail Group -15.25% 2.96% 0.94%

Insider & Institutional Ownership

78.7% of L Brands shares are owned by institutional investors. Comparatively, 95.7% of Ascena Retail Group shares are owned by institutional investors. 16.7% of L Brands shares are owned by insiders. Comparatively, 8.6% of Ascena Retail Group shares are owned by 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.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for L Brands and Ascena Retail Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
L Brands 4 14 10 0 2.21
Ascena Retail Group 1 7 0 0 1.88

L Brands currently has a consensus target price of $47.46, indicating a potential upside of 27.93%. Ascena Retail Group has a consensus target price of $3.83, indicating a potential upside of 93.60%. Given Ascena Retail Group’s higher probable upside, analysts plainly believe Ascena Retail Group is more favorable than L Brands.

Summary

L Brands beats Ascena Retail Group on 10 of the 16 factors compared between the two stocks.

About L Brands

L Brands, Inc. operates specialty retail business. The Company is focused on women’s intimate and other apparel, personal care, beauty and home fragrance categories. Its segments include Victoria’s Secret, Bath & Body Works, and Victoria’s Secret and Bath & Body Works International. It sells its merchandise through company-owned specialty retail stores in the United States, Canada, the United Kingdom and Greater China, which are mall-based; through Websites, and through international franchise, license and wholesale partners. It operates in the retail brands, which include Victoria’s Secret, PINK, Bath & Body Works and La Senza. La Senza is a specialty retailer of women’s intimate apparel. It sells its La Senza products at over 120 La Senza stores in Canada. Henri Bendel sells handbags, jewelry and other accessory products through New York and 28 other stores. Mast Global is a merchandise sourcing and production function serving the Company and its international partners.

About Ascena Retail Group

Ascena Retail Group, Inc. is a specialty retailer of apparel for women and tween girls. The Company operates through six segments: ANN, Justice, Lane Bryant, maurices, dressbarn and Catherines. The ANN segment offers feminine classics and fashion choices, sold primarily under the Ann Taylor and LOFT brands. The Justice segment offers apparel to girls who are aged 6 to 12. The Lane Bryant segment offers apparel to female customers in plus-sizes 14-28. The maurices segment offers women’s casual clothing, career wear, dressy apparel, active wear and accessories. The dressbarn segment consists of the specialty retail, outlet and e-commerce operations of the dressbarn brand. The Catherines segment offers classic apparel and accessories to female customers for wear-to-work and casual lifestyles. As of July 30, 2016, the Company operated approximately 4,900 stores in 49 United States’ states, the District of Columbia, Canada and Puerto Rico.

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