Critical Analysis: PURPLE INNOVATION (NASDAQ:PRPL) and Yatsen (NYSE:YSG)

PURPLE INNOVATION (NASDAQ:PRPL) and Yatsen (NYSE:YSG) are both small-cap consumer staples companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.

Volatility and Risk

PURPLE INNOVATION has a beta of 1.57, indicating that its stock price is 57% more volatile than the S&P 500. Comparatively, Yatsen has a beta of -2.11, indicating that its stock price is 311% less volatile than the S&P 500.

Insider and Institutional Ownership

88.4% of PURPLE INNOVATION shares are held by institutional investors. 53.9% of PURPLE INNOVATION shares are held by company insiders. Comparatively, 29.0% of Yatsen shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares PURPLE INNOVATION and Yatsen”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PURPLE INNOVATION	$487.88 million	0.26	-$97.90 million	($0.78)	-1.49
Yatsen	$464.90 million	1.85	-$97.02 million	($0.76)	-12.29

Yatsen has lower revenue, but higher earnings than PURPLE INNOVATION. Yatsen is trading at a lower price-to-earnings ratio than PURPLE INNOVATION, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for PURPLE INNOVATION and Yatsen, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PURPLE INNOVATION	0	1	0	0	2.00
Yatsen	0	0	0	0	0.00

PURPLE INNOVATION currently has a consensus target price of $1.00, indicating a potential downside of 13.79%. Given PURPLE INNOVATION’s stronger consensus rating and higher possible upside, research analysts clearly believe PURPLE INNOVATION is more favorable than Yatsen.

Profitability

This table compares PURPLE INNOVATION and Yatsen’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PURPLE INNOVATION	-18.43%	-472.12%	-13.20%
Yatsen	-14.05%	-16.35%	-12.83%

Summary

PURPLE INNOVATION beats Yatsen on 7 of the 13 factors compared between the two stocks.

About PURPLE INNOVATION

Purple Innovation, Inc. designs and manufactures sleep and other products in the United States and internationally. The company offers mattresses, pillows, cushions, bases, sheets, platforms, adjustable bases, mattress protectors, foundations, blankets, duvets, duvet covers, seat cushions, and pet beds under the Purple brand. It markets and sells its products through its e-commerce online channels, retail brick-and-mortar wholesale partners, third-party online retailers, and Purple showrooms, as well as through its website, Purple.com. The company was founded in 2010 and is headquartered in Lehi, Utah.

About Yatsen

Yatsen Holding Limited, together with its subsidiaries, engages in the development and sale of beauty products under the Perfect Diary, Little Ondine, Pink Bear, Abby’s Choice, GalÃnic, DR.WU, Eve Lom, and EANTiM brands in the People’s Republic of China. The company offers color cosmetics for lips, eyes, and face; skin care products, including face serums and creams, eye creams, masks, toners, makeup removers, cleansers, ampoules, and anti-acne patches; and beauty tools and kits, sunscreen products, and beauty devices. It sells its products through stores and online channel. The company was formerly known as Mangrove Bay Ecommerce Holding (Cayman) and changed its name to Yatsen Holding Limited in January 2019. Yatsen Holding Limited was founded in 2016 and is headquartered in Guangzhou, China.