Michael Kors (KORS) & Ascena Retail Group (ASNA) Critical Comparison

Michael Kors (NYSE: KORS) and Ascena Retail Group (NASDAQ:ASNA) are both cyclical consumer goods & services companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, dividends and valuation.

Volatility & Risk

Michael Kors has a beta of 0.13, indicating that its stock price is 87% less volatile than the S&P 500. Comparatively, Ascena Retail Group has a beta of 1.96, indicating that its stock price is 96% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Michael Kors and Ascena Retail Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Michael Kors 1 18 11 0 2.33
Ascena Retail Group 1 8 0 0 1.89

Michael Kors presently has a consensus target price of $52.61, suggesting a potential downside of 17.02%. Ascena Retail Group has a consensus target price of $2.75, suggesting a potential upside of 14.11%. Given Ascena Retail Group’s higher probable upside, analysts plainly believe Ascena Retail Group is more favorable than Michael Kors.

Insider and Institutional Ownership

86.3% of Michael Kors shares are held by institutional investors. Comparatively, 94.9% of Ascena Retail Group shares are held by institutional investors. 6.0% of Michael Kors shares are held by insiders. Comparatively, 8.0% of Ascena Retail Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Michael Kors and Ascena Retail Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Michael Kors $4.49 billion 2.15 $552.50 million $3.59 17.66
Ascena Retail Group $6.65 billion 0.07 -$1.07 billion ($5.51) -0.44

Michael Kors has higher earnings, but lower revenue than Ascena Retail Group. Ascena Retail Group is trading at a lower price-to-earnings ratio than Michael Kors, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Michael Kors and Ascena Retail Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Michael Kors 12.68% 42.09% 28.42%
Ascena Retail Group -16.39% 2.50% 0.64%

Summary

Michael Kors beats Ascena Retail Group on 9 of the 14 factors compared between the two stocks.

Michael Kors Company Profile

Michael Kors Holdings Limited is a designer, marketer, distributor and retailer of branded women’s apparel and accessories and men’s apparel bearing the Michael Kors tradename and related trademarks MICHAEL KORS, MICHAEL MICHAEL KORS, and various other related trademarks and logos. The Company operates through three segments: retail, wholesale and licensing. The Retail operations consist of collection stores and lifestyle stores, including concessions and outlet stores, located primarily in the Americas (the United States, Canada and Latin America), Europe and Asia, as well as e-commerce. Wholesale revenues are principally derived from major department and specialty stores located throughout the Americas, Europe and Asia. The Company licenses its trademarks on products, such as fragrances, beauty, eyewear, leather goods, jewelry, watches, coats, men’s suits, swimwear, furs and ties, as well as through geographic licenses.

Ascena Retail Group Company Profile

Ascena Retail Group, Inc. is a specialty retailer of apparel for women and tween girls. The Company operates through six segments: ANN, Justice, Lane Bryant, maurices, dressbarn and Catherines. The ANN segment offers feminine classics and fashion choices, sold primarily under the Ann Taylor and LOFT brands. The Justice segment offers apparel to girls who are aged 6 to 12. The Lane Bryant segment offers apparel to female customers in plus-sizes 14-28. The maurices segment offers women’s casual clothing, career wear, dressy apparel, active wear and accessories. The dressbarn segment consists of the specialty retail, outlet and e-commerce operations of the dressbarn brand. The Catherines segment offers classic apparel and accessories to female customers for wear-to-work and casual lifestyles. As of July 30, 2016, the Company operated approximately 4,900 stores in 49 United States’ states, the District of Columbia, Canada and Puerto Rico.

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