Children’s Place (NASDAQ:PLCE) and Rent the Runway (NASDAQ:RENT) Financial Analysis

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

Insider and Institutional Ownership

73.1% of Rent the Runway shares are held by institutional investors. 0.4% of Rent the Runway shares are held by company insiders. Comparatively, 0.9% of Children’s Place 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.

Risk & Volatility

Rent the Runway has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500. Comparatively, Children’s Place has a beta of 1.94, indicating that its share price is 94% more volatile than the S&P 500.

Profitability

This table compares Rent the Runway and Children’s Place’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rent the Runway	8.51%	N/A	-30.10%
Children’s Place	-9.09%	N/A	-12.53%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rent the Runway	1	0	0	0	1.00
Children’s Place	1	1	0	0	1.50

Children’s Place has a consensus target price of $4.00, suggesting a potential upside of 51.52%. Given Children’s Place’s stronger consensus rating and higher possible upside, analysts clearly believe Children’s Place is more favorable than Rent the Runway.

Valuation & Earnings

This table compares Rent the Runway and Children’s Place”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rent the Runway	$329.80 million	0.31	$22.60 million	$6.49	0.48
Children’s Place	$1.21 billion	0.05	-$88.26 million	($4.84)	-0.55

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

About Rent the Runway

Rent the Runway, Inc. operates shared designer closet in the United States. The company offers evening wear and accessories, ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, and ski wear under subscription, rental, and resale offering. It also engages in the software development and support activities. Rent the Runway, Inc. was incorporated in 2009 and is headquartered in Brooklyn, New York.

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.