Critical Review: Duluth (NASDAQ:DLTH) versus Wacoal (OTCMKTS:WACLY)

Duluth (NASDAQ:DLTH) and Wacoal (OTCMKTS:WACLY) are both small-cap consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, earnings, institutional ownership, dividends, valuation, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Duluth and Wacoal, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Duluth	1	0	1	2	3.00
Wacoal	0	0	0	0	0.00

Duluth presently has a consensus target price of $7.00, indicating a potential upside of 114.72%. Given Duluth’s stronger consensus rating and higher probable upside, analysts plainly believe Duluth is more favorable than Wacoal.

Profitability

This table compares Duluth and Wacoal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Duluth	-7.99%	-14.31%	-5.30%
Wacoal	10.52%	8.87%	6.41%

Volatility and Risk

Duluth has a beta of 1.47, indicating that its share price is 47% more volatile than the S&P 500. Comparatively, Wacoal has a beta of 0.01, indicating that its share price is 99% less volatile than the S&P 500.

Valuation and Earnings

This table compares Duluth and Wacoal”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Duluth	$626.63 million	0.19	-$43.67 million	($1.43)	-2.28
Wacoal	$1.14 billion	1.72	$46.13 million	$11.69	16.30

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

Insider and Institutional Ownership

24.4% of Duluth shares are held by institutional investors. 42.9% of Duluth shares are held by company insiders. Comparatively, 0.8% of Wacoal shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Wacoal beats Duluth on 8 of the 15 factors compared between the two stocks.

About Duluth

Duluth Holdings Inc. sells casual wear, workwear, and accessories for men and women under the Duluth Trading brand in the United States. It provides shirts, pants, underwear, tanks, outerwear, footwear, accessories, and hard goods. The company offers its products under various trademarks, trade names, and service marks, including Alaskan Hardgear, Armachillo, Ballroom, Bucket Master, Cab Commander, Crouch Gusset, Dry on the Fly, Duluth Trading Co, Duluthflex, Fire Hose, Longtail T, No-Yank, No Polo Shirt, Wild Boar Mocs, and Buck Naked. Duluth Holdings Inc. markets its products through its Website, catalogs, and retail stores. As of May 17, 2018, it operated 36 retail stores. The company was formerly known as GEMPLER'S, Inc. Duluth Holdings Inc. was founded in 1989 and is headquartered in Belleville, Wisconsin.

About Wacoal

Wacoal Holdings Corp. engages in the manufacturing, wholesale, and retail sale of intimate apparel, outerwear, sportswear, and other textile products and accessories in Japan, Asia, Oceania, the United States, and Europe. The company operates through Wacoal Business (Domestic), Wacoal Business (Overseas), Peach John Business, and Other Businesses segments. It offers intimate apparel mainly women’s foundation wear, lingerie, nightwear and children’s underwear; and outerwear, sportswear, and other textile products and accessories. The company also engages in the restaurant, cultural and service-related businesses; and manufacture and sale of mannequins and fixtures, interior design work, and other textile-related businesses. It offers products through department stores, general merchandisers, and other general retailers in Japan, as well as directly managed retail stores, E-commerce websites, and distributors in Japan and internationally. Wacoal Holdings Corp. was founded in 1946 and is headquartered in Kyoto, Japan.