Reviewing Zalando (OTCMKTS:ZLNDY) & Stitch Fix (NASDAQ:SFIX)

Stitch Fix (NASDAQ:SFIX) and Zalando (OTCMKTS:ZLNDY) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, earnings and profitability.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Stitch Fix and Zalando, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stitch Fix	0	5	1	0	2.17
Zalando	1	1	2	1	2.60

Stitch Fix currently has a consensus target price of $6.00, indicating a potential upside of 27.93%. Given Stitch Fix’s higher possible upside, research analysts clearly believe Stitch Fix is more favorable than Zalando.

Profitability

This table compares Stitch Fix and Zalando’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stitch Fix	-2.27%	-14.57%	-5.93%
Zalando	2.49%	10.19%	3.37%

Valuation and Earnings

This table compares Stitch Fix and Zalando”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stitch Fix	$1.27 billion	0.48	-$28.74 million	($0.23)	-20.39
Zalando	$11.44 billion	0.71	$271.71 million	$0.57	26.98

Zalando has higher revenue and earnings than Stitch Fix. Stitch Fix is trading at a lower price-to-earnings ratio than Zalando, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Stitch Fix has a beta of 2.03, meaning that its share price is 103% more volatile than the S&P 500. Comparatively, Zalando has a beta of 1.48, meaning that its share price is 48% more volatile than the S&P 500.

Institutional and Insider Ownership

71.0% of Stitch Fix shares are held by institutional investors. 17.0% of Stitch Fix shares are held by company 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.

Summary

Zalando beats Stitch Fix on 11 of the 15 factors compared between the two stocks.

About Stitch Fix

Stitch Fix, Inc. sells a range of apparel, shoes, and accessories for men, women, and kids through its website and mobile application in the United States and the United Kingdom. It offers denim, dresses, blouses, skirts, shoes, jewelry, and handbags under the Stitch Fix brand. The company was formerly known as rack habit inc. and changed its name to Stitch Fix, Inc. in October 2011. Stitch Fix, Inc. was incorporated in 2011 and is headquartered in San Francisco, California.

About Zalando

Zalando SE operates an online platform for fashion and lifestyle products. The company operates through Fashion Store and Offprice segments. It provides shoes, apparel, accessories, and beauty products with free delivery and returns, as well as various payment options. The company also sells its products through Lounge by Zalando; and brick-and-mortar outlet stores. It operates in Germany, Austria, Switzerland, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, Hungary, France, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. The company was founded in 2008 and is headquartered in Berlin, Germany.