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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Ascena Retail Group and Sequential Brands Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ascena Retail Group 1 9 0 0 1.90
Sequential Brands Group 0 4 3 0 2.43

Ascena Retail Group currently has a consensus price target of $3.36, indicating a potential upside of 69.55%. Sequential Brands Group has a consensus price target of $6.92, indicating a potential upside of 361.11%. Given Sequential Brands Group’s stronger consensus rating and higher probable upside, analysts clearly believe Sequential Brands Group is more favorable than Ascena Retail Group.

Profitability

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

Net Margins Return on Equity Return on Assets
Ascena Retail Group -16.39% 2.50% 0.64%
Sequential Brands Group -14.35% 2.26% 0.85%

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ascena Retail Group $6.65 billion 0.06 -$1.07 billion ($5.52) -0.36
Sequential Brands Group $155.53 million 0.61 -$820,000.00 ($0.38) -3.95

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

Insider & Institutional Ownership

95.0% of Ascena Retail Group shares are held by institutional investors. Comparatively, 50.3% of Sequential Brands Group shares are held by institutional investors. 8.0% of Ascena Retail Group shares are held by company insiders. Comparatively, 27.3% of Sequential Brands Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Ascena Retail Group has a beta of 1.96, suggesting that its stock price is 96% more volatile than the S&P 500. Comparatively, Sequential Brands Group has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500.

Summary

Sequential Brands Group beats Ascena Retail Group on 9 of the 14 factors compared between the two stocks.

Ascena Retail Group Company Profile

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.

Sequential Brands Group Company Profile

Sequential Brands Group, Inc. owns a portfolio of consumer brands in the fashion, home, athletic and lifestyle categories. The Company’s portfolio of consumer brands includes Martha Stewart, Emeril Lagasse, Jessica Simpson, Joe’s Jeans, William Rast, Ellen Tracy, Revo, AND1 and Avia. The Company’s brands are licensed for a range of product categories, including apparel, footwear, eyewear, fashion accessories and home goods. The Company licenses brands to both wholesale and direct-to-retail licensees. The Company licenses the Martha Stewart brand to various licensees, including retailers, such as Macy’s, The Home Depot, PetSmart and Staples. The Jessica Simpson Collection is a signature lifestyle concept designed in collaboration with Jessica Simpson, which offers various product categories, including footwear, apparel, fragrance, fashion accessories, maternity apparel, girls clothing and a home line. The Avia brand offers running and activewear products.

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