Critical Analysis: Children’s Place (NASDAQ:PLCE) vs. Stitch Fix (NASDAQ:SFIX)

Stitch Fix (NASDAQ:SFIX) and Children’s Place (NASDAQ:PLCE) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, earnings, profitability and valuation.

Insider & Institutional Ownership

71.0% of Stitch Fix shares are held by institutional investors. 16.1% of Stitch Fix shares are held by company insiders. Comparatively, 0.6% of Children’s Place shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Stitch Fix and Children’s Place”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stitch Fix	$1.27 billion	0.54	-$28.74 million	($0.16)	-32.13
Children’s Place	$1.39 billion	0.06	-$57.82 million	($2.62)	-1.55

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

Analyst Ratings

This is a summary of recent ratings and price targets for Stitch Fix and Children’s Place, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stitch Fix	1	4	1	0	2.00
Children’s Place	1	1	0	0	1.50

Stitch Fix currently has a consensus target price of $6.00, suggesting a potential upside of 16.73%. Children’s Place has a consensus target price of $5.50, suggesting a potential upside of 35.47%. Given Children’s Place’s higher possible upside, analysts clearly believe Children’s Place is more favorable than Stitch Fix.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Stitch Fix	-2.23%	-14.38%	-5.88%
Children’s Place	-4.01%	N/A	-6.44%

Risk & Volatility

Stitch Fix has a beta of 2.22, indicating that its stock price is 122% more volatile than the S&P 500. Comparatively, Children’s Place has a beta of 1.84, indicating that its stock price is 84% more volatile than the S&P 500.

Summary

Stitch Fix beats Children’s Place on 10 of the 14 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 Children’s Place

The Children’s Place, Inc. engages in the provision of apparel, footwear, accessories, and other items for children. The firm also designs contracts to manufacture and sell fashionable and value-priced merchandise under the brand names of The Children’s Place, Baby Place, and Gymboree. It operates through The Children’s Place U.S. and The Children’s Place International segments. The Children’s Place U.S. segment refers to the company’s U.S. and Puerto Rico-based stores and revenue from its U.S. based wholesale business. The Children’s Place International segment is involved in the Canadian-based stores, revenue from the company’s Canadian-based wholesale business, as well as revenue from international franchisees. The company was founded by David Pulver and Clinton A. Clark in 1969 and is headquartered in Secaucus, NJ.