Contrasting Bath & Body Works (NYSE:BBWI) and DICK’S Sporting Goods (NYSE:DKS)

DICK’S Sporting Goods (NYSE:DKS) and Bath & Body Works (NYSE:BBWI) are both retail/wholesale companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.

Analyst Recommendations

This is a summary of recent recommendations for DICK’S Sporting Goods and Bath & Body Works, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DICK’S Sporting Goods	0	10	10	0	2.50
Bath & Body Works	0	3	12	0	2.80

DICK’S Sporting Goods presently has a consensus target price of $235.83, indicating a potential upside of 6.20%. Bath & Body Works has a consensus target price of $39.69, indicating a potential upside of 58.07%. Given Bath & Body Works’ stronger consensus rating and higher probable upside, analysts clearly believe Bath & Body Works is more favorable than DICK’S Sporting Goods.

Earnings & Valuation

This table compares DICK’S Sporting Goods and Bath & Body Works”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DICK’S Sporting Goods	$13.77 billion	1.29	$1.17 billion	$14.32	15.51
Bath & Body Works	$7.31 billion	0.71	$798.00 million	$3.37	7.45

DICK’S Sporting Goods has higher revenue and earnings than Bath & Body Works. Bath & Body Works is trading at a lower price-to-earnings ratio than DICK’S Sporting Goods, indicating that it is currently the more affordable of the two stocks.

Dividends

DICK’S Sporting Goods pays an annual dividend of $4.85 per share and has a dividend yield of 2.2%. Bath & Body Works pays an annual dividend of $0.80 per share and has a dividend yield of 3.2%. DICK’S Sporting Goods pays out 33.9% of its earnings in the form of a dividend. Bath & Body Works pays out 23.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. DICK’S Sporting Goods has increased its dividend for 11 consecutive years. Bath & Body Works is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

89.8% of DICK’S Sporting Goods shares are owned by institutional investors. Comparatively, 95.1% of Bath & Body Works shares are owned by institutional investors. 32.5% of DICK’S Sporting Goods shares are owned by insiders. Comparatively, 0.3% of Bath & Body Works shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility & Risk

DICK’S Sporting Goods has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500. Comparatively, Bath & Body Works has a beta of 1.49, indicating that its share price is 49% more volatile than the S&P 500.

Profitability

This table compares DICK’S Sporting Goods and Bath & Body Works’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DICK’S Sporting Goods	8.52%	36.54%	11.01%
Bath & Body Works	9.88%	-48.43%	15.18%

Summary

Bath & Body Works beats DICK’S Sporting Goods on 9 of the 17 factors compared between the two stocks.

About DICK’S Sporting Goods

DICK’s Sporting Goods, Inc. engages in the retailing of an extensive assortment of authentic sports equipment, apparel, footwear, and accessories. It also offers its products both online and through mobile applications. The company was founded by Richard T. Stack in 1948 and is headquartered in Coraopolis, PA.

About Bath & Body Works

Bath & Body Works, Inc. is a specialty retailers and home to America’s Favorite Fragrances, offering a breadth of exclusive fragrances for the body and home, including the selling collections for fine fragrance mist, body lotion and body cream, 3-wick candles, home fragrance diffusers and liquid hand soap. The company was founded by Leslie Herbert Wexner in 1963 and is headquartered in Columbus, OH.