Francesca's (FRAN) vs. GAP (GPS) Financial Survey

Francesca's (NASDAQ: FRAN) and GAP (NYSE:GPS) are both apparel & accessories retailers – nec companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, institutional ownership, risk, dividends, analyst recommendations and profitability.

Dividends

GAP pays an annual dividend of $0.92 per share and has a dividend yield of 2.8%. Francesca's does not pay a dividend. GAP pays out 42.4% of its earnings in the form of a dividend.

Institutional and Insider Ownership

55.0% of GAP shares are owned by institutional investors. 1.2% of Francesca's shares are owned by insiders. Comparatively, 27.3% of GAP shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Francesca's and GAP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Francesca's 5.52% 23.19% 13.64%
GAP 5.57% 27.47% 10.56%

Valuation & Earnings

This table compares Francesca's and GAP’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Francesca's $487.19 million 0.40 $42.00 million $0.71 7.65
GAP $15.52 billion 0.81 $676.00 million $2.17 14.94

GAP has higher revenue and earnings than Francesca's. Francesca's is trading at a lower price-to-earnings ratio than GAP, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations for Francesca's and GAP, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Francesca's 0 6 1 0 2.14
GAP 3 18 5 0 2.08

Francesca's presently has a consensus target price of $10.67, indicating a potential upside of 96.44%. GAP has a consensus target price of $28.77, indicating a potential downside of 11.28%. Given Francesca's’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Francesca's is more favorable than GAP.

Volatility & Risk

Francesca's has a beta of -0.05, indicating that its share price is 105% less volatile than the S&P 500. Comparatively, GAP has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500.

Summary

GAP beats Francesca's on 12 of the 16 factors compared between the two stocks.

Francesca's Company Profile

Francesca’s Holdings Corporation is a holding company. The Company is a specialty retailer, which operates a chain of boutiques across the United States. The Company offers a mix of apparel, jewelry, accessories and gifts. As of January 28, 2017, the Company operated 671 boutiques in 48 states and the District of Columbia, and also served its customers through www.francescas.com, its e-commerce Website. The Company offers apparel, such as dresses, fashion tops, sweaters, cardigans and wraps, bottoms, outerwear and jackets, tees and tanks, and intimates. The Company provides jewelry, such as necklaces, earrings, bracelets and rings. The Company offers accessories, such as handbags, clutches, wallets, shoes, belts, hats, scarves, sunglasses, watches and hair accessories. The Company provides gifts, such as fragrance, candles, bath and body, home accessories, books, wall art, nail polish and miscellaneous items. The Company operates its boutiques under the francesca’s brand.

GAP Company Profile

The Gap, Inc. (Gap Inc.) is an apparel retail company. The Company offers apparel, accessories and personal care products for men, women and children under the Gap, Banana Republic, Old Navy, Athleta and Intermix brands. Its products are available to customers online through Company-owned Websites and through the use of third-parties that provide logistics and fulfillment services. In addition to operating in the specialty, outlet, online and franchise channels, it also uses the Company’s omni-channel capabilities to bridge the digital world and physical stores. Its omni-channel services, including order-in-store, reserve-in-store, find-in-store and ship-from-store are tailored across its portfolio of brands. It also sells products that are designed and manufactured by branded third-parties, especially at its Intermix brands. It has Company-operated stores in the United States, Canada, the United Kingdom, France, Ireland, Japan, Italy, China, Hong Kong, Taiwan, and Mexico.

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