At Home Group (NYSE: HOME) and Pier 1 Imports (NYSE:PIR) are both small-cap home furnishings retailers – nec companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, profitability, risk, institutional ownership, analyst recommendations, earnings and dividends.

Earnings and Valuation

This table compares At Home Group and Pier 1 Imports’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
At Home Group $765.64 million 2.24 $27.06 million $0.60 47.32
Pier 1 Imports $1.83 billion 0.24 $30.12 million $0.36 14.31

Pier 1 Imports has higher revenue and earnings than At Home Group. Pier 1 Imports is trading at a lower price-to-earnings ratio than At Home Group, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

24.8% of At Home Group shares are held by institutional investors. Comparatively, 78.1% of Pier 1 Imports shares are held by institutional investors. 7.3% of At Home Group shares are held by company insiders. Comparatively, 5.5% of Pier 1 Imports 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.

Profitability

This table compares At Home Group and Pier 1 Imports’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
At Home Group 4.18% 7.53% 3.21%
Pier 1 Imports 1.61% 13.82% 4.56%

Analyst Recommendations

This is a summary of current ratings and price targets for At Home Group and Pier 1 Imports, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
At Home Group 0 2 5 0 2.71
Pier 1 Imports 4 11 0 0 1.73

At Home Group presently has a consensus price target of $27.50, indicating a potential downside of 3.13%. Pier 1 Imports has a consensus price target of $5.16, indicating a potential upside of 0.19%. Given Pier 1 Imports’ higher probable upside, analysts plainly believe Pier 1 Imports is more favorable than At Home Group.

Dividends

Pier 1 Imports pays an annual dividend of $0.28 per share and has a dividend yield of 5.4%. At Home Group does not pay a dividend. Pier 1 Imports pays out 77.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pier 1 Imports has increased its dividend for 4 consecutive years.

At Home Group Company Profile

At Home Group, Inc. is a home decor superstore. The Company is focused on providing a range of assortment of products for any room, in any style, for any budget. As of July 30, 2016, the Company offered over 50,000 stock keeping units (SKUs) throughout its stores. As of July 30, 2016, the Company’s store base is consisted of 115 format stores across 29 states and 65 markets, averaging approximately 120,000 square feet per store.

Pier 1 Imports Company Profile

Pier 1 Imports, Inc. is an importer of home decor and furniture. The Company’s operations consist of retail stores and an e-commerce Website conducting business under the name Pier 1 Imports, which sells a range of decorative accessories, furniture, candles, housewares, gifts and seasonal products. The Company’s categories of merchandise include decorative accessories and furniture. The decorative accessories category includes decorative accents and textiles, such as rugs, wall decorations and mirrors, candles, fragrance, gifts and seasonal items. The furniture category includes furniture and furniture cushions to be used in living, dining, office, sunrooms and patios. This merchandise group is generally made of metal or handcrafted natural materials, including rattan, pine, acacia, oak and other woods with either natural, stained, painted or upholstered finishes.

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