Critical Comparison: GAP (NYSE:GAP) and Next (OTCMKTS:NXGPY)

Next (OTCMKTS:NXGPY) and GAP (NYSE:GAP) are both retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their risk, institutional ownership, earnings, dividends, valuation, analyst recommendations and profitability.

Volatility and Risk

Next has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500. Comparatively, GAP has a beta of 2.29, suggesting that its stock price is 129% more volatile than the S&P 500.

Institutional & Insider Ownership

58.8% of GAP shares are held by institutional investors. 31.0% of GAP shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Next and GAP, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Next	0	1	0	1	3.00
GAP	0	4	11	2	2.88

GAP has a consensus target price of $30.46, suggesting a potential upside of 32.02%. Given GAP’s higher probable upside, analysts plainly believe GAP is more favorable than Next.

Earnings & Valuation

This table compares Next and GAP”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Next	$7.82 billion	2.71	$938.45 million	N/A	N/A
GAP	$15.37 billion	0.56	$816.00 million	$2.15	10.73

Next has higher earnings, but lower revenue than GAP.

Dividends

Next pays an annual dividend of $1.03 per share and has a dividend yield of 1.2%. GAP pays an annual dividend of $0.66 per share and has a dividend yield of 2.9%. GAP pays out 30.7% of its earnings in the form of a dividend. GAP has increased its dividend for 1 consecutive years. GAP is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Next and GAP’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Next	N/A	N/A	N/A
GAP	5.31%	22.98%	6.70%

Summary

GAP beats Next on 12 of the 16 factors compared between the two stocks.

About Next

NEXT plc engages in the retail of clothing, beauty, footwear, and home products in the United Kingdom, rest of Europe, the Middle East, Asia, and internationally. The company operates through NEXT Retail; NEXT Online; NEXT Finance; Total Platform; Property Management; and Franchise, Sourcing, and other segments. It offers consumer credit; NEXT branded products; and women’s, men’s, children’s, clothing, homeware, and beauty products under the LABEL brand, as well as other third-party brands. The company also provides property management services, including holding and lease of properties; operates call centers; and websites, marketing, warehousing, and distribution networks to third-party brands. It operates through retail stores, online retail platforms, and franchise stores. The company was formerly known as J Hepworth & Son and changed its name to NEXT plc in 1986. NEXT plc was founded in 1864 and is headquartered in Enderby, the United Kingdom.

About GAP

Gap, Inc. operates as a global apparel retail company, which offers clothing, apparel, accessories, and personal care products for men, women, and children. The firm operates through the following segments: Gap Global, Old Navy Global, Banana Republic Global, Athleta, and Other. The Gap Global segment includes apparel and accessories for men and women under the Gap brand, along with the GapKids, BabyGap, GapMaternity, GapBody, and GapFit collections. The Old Navy Global segment offers clothing and accessories for adults and children. The Banana Republic Global segment provides clothing, eyewear, jewelry, shoes, handbags, and fragrances. The Athleta segment offers fitness apparel for women. The company founded by Donald G. Fisher and Doris F. Fisher in July 1969 and is headquartered in San Francisco, CA.