Rent the Runway (NASDAQ:RENT) versus Lulu’s Fashion Lounge (NASDAQ:LVLU) Financial Review

Rent the Runway (NASDAQ:RENT) and Lulu’s Fashion Lounge (NASDAQ:LVLU) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Institutional & Insider Ownership

73.1% of Rent the Runway shares are owned by institutional investors. Comparatively, 73.8% of Lulu’s Fashion Lounge shares are owned by institutional investors. 8.2% of Rent the Runway shares are owned by company insiders. Comparatively, 6.8% of Lulu’s Fashion Lounge shares are owned 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.

Analyst Ratings

This is a summary of current ratings and target prices for Rent the Runway and Lulu’s Fashion Lounge, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rent the Runway	1	0	0	0	1.00
Lulu’s Fashion Lounge	1	0	0	0	1.00

Profitability

This table compares Rent the Runway and Lulu’s Fashion Lounge’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rent the Runway	6.85%	N/A	-32.17%
Lulu’s Fashion Lounge	-3.56%	-423.50%	-9.95%

Volatility & Risk

Rent the Runway has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500. Comparatively, Lulu’s Fashion Lounge has a beta of 0.42, indicating that its share price is 58% less volatile than the S&P 500.

Valuation and Earnings

This table compares Rent the Runway and Lulu’s Fashion Lounge”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rent the Runway	$329.80 million	0.40	$22.60 million	$0.48	8.23
Lulu’s Fashion Lounge	$282.28 million	0.10	-$13.71 million	($3.50)	-2.69

Rent the Runway has higher revenue and earnings than Lulu’s Fashion Lounge. Lulu’s Fashion Lounge is trading at a lower price-to-earnings ratio than Rent the Runway, indicating that it is currently the more affordable of the two stocks.

Summary

Rent the Runway beats Lulu’s Fashion Lounge on 9 of the 11 factors compared between the two stocks.

About Rent the Runway

Rent the Runway, Inc. operates shared designer closet in the United States. The company offers evening wear and accessories, ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, and ski wear under subscription, rental, and resale offering. It also engages in the software development and support activities. Rent the Runway, Inc. was incorporated in 2009 and is headquartered in Brooklyn, New York.

About Lulu’s Fashion Lounge

Lulu’s Fashion Lounge Holdings, Inc. engages in providing an online website for clothing. It offers retailing of women’s clothing, shoes, and accessories. The company was founded in 1996 and is headquartered in Chico, CA.