Financial Contrast: L Brands (LB) and Francesca's (FRAN)

L Brands (NYSE: LB) and Francesca's (NASDAQ:FRAN) are both cyclical consumer goods & services companies, but which is the better business? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, profitability, institutional ownership, dividends and valuation.

Risk and Volatility

L Brands has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Francesca's has a beta of 0.23, meaning that its stock price is 77% less volatile than the S&P 500.

Insider & Institutional Ownership

78.7% of L Brands shares are held by institutional investors. 16.7% of L Brands shares are held by company insiders. Comparatively, 1.2% of Francesca's shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares L Brands and Francesca's’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
L Brands 7.73% -101.19% 11.49%
Francesca's 5.52% 23.19% 13.64%

Dividends

L Brands pays an annual dividend of $2.40 per share and has a dividend yield of 5.0%. Francesca's does not pay a dividend. L Brands pays out 73.2% of its earnings in the form of a dividend. L Brands has raised its dividend for 7 consecutive years.

Analyst Ratings

This is a summary of current ratings and recommmendations for L Brands and Francesca's, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
L Brands 4 17 12 0 2.24
Francesca's 0 6 1 0 2.14

L Brands presently has a consensus price target of $52.13, indicating a potential upside of 7.85%. Francesca's has a consensus price target of $10.67, indicating a potential upside of 97.17%. Given Francesca's’ higher possible upside, analysts plainly believe Francesca's is more favorable than L Brands.

Earnings & Valuation

This table compares L Brands and Francesca's’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
L Brands $12.57 billion 1.08 $1.16 billion $3.28 14.73
Francesca's $487.19 million 0.40 $42.00 million $0.71 7.62

L Brands has higher revenue and earnings than Francesca's. Francesca's is trading at a lower price-to-earnings ratio than L Brands, indicating that it is currently the more affordable of the two stocks.

Summary

L Brands beats Francesca's on 13 of the 17 factors compared between the two stocks.

About L Brands

L Brands, Inc. operates specialty retail business. The Company is focused on women’s intimate and other apparel, personal care, beauty and home fragrance categories. Its segments include Victoria’s Secret, Bath & Body Works, and Victoria’s Secret and Bath & Body Works International. It sells its merchandise through company-owned specialty retail stores in the United States, Canada, the United Kingdom and Greater China, which are mall-based; through Websites, and through international franchise, license and wholesale partners. It operates in the retail brands, which include Victoria’s Secret, PINK, Bath & Body Works and La Senza. La Senza is a specialty retailer of women’s intimate apparel. It sells its La Senza products at over 120 La Senza stores in Canada. Henri Bendel sells handbags, jewelry and other accessory products through New York and 28 other stores. Mast Global is a merchandise sourcing and production function serving the Company and its international partners.

About Francesca's

Francesca’s Holdings Corporation is a holding company. The Company is a specialty retailer, which operates a chain of boutiques across the United States. The Company offers a mix of apparel, jewelry, accessories and gifts. As of January 28, 2017, the Company operated 671 boutiques in 48 states and the District of Columbia, and also served its customers through www.francescas.com, its e-commerce Website. The Company offers apparel, such as dresses, fashion tops, sweaters, cardigans and wraps, bottoms, outerwear and jackets, tees and tanks, and intimates. The Company provides jewelry, such as necklaces, earrings, bracelets and rings. The Company offers accessories, such as handbags, clutches, wallets, shoes, belts, hats, scarves, sunglasses, watches and hair accessories. The Company provides gifts, such as fragrance, candles, bath and body, home accessories, books, wall art, nail polish and miscellaneous items. The Company operates its boutiques under the francesca’s brand.

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