Comparing Groupon (NASDAQ:GRPN) & Macy’s (NYSE:M)

Macy’s (NYSE:M) and Groupon (NASDAQ:GRPN) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, dividends, analyst recommendations and earnings.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Macy’s and Groupon, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Macy’s	2	8	2	1	2.15
Groupon	2	1	1	0	1.75

Macy’s currently has a consensus price target of $22.78, suggesting a potential upside of 0.54%. Groupon has a consensus price target of $26.00, suggesting a potential upside of 36.05%. Given Groupon’s higher possible upside, analysts plainly believe Groupon is more favorable than Macy’s.

Valuation & Earnings

This table compares Macy’s and Groupon”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Macy’s	$22.78 billion	0.26	$642.00 million	$2.73	8.30
Groupon	$498.42 million	1.56	-$83.52 million	($3.11)	-6.14

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

Risk and Volatility

Macy’s has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500. Comparatively, Groupon has a beta of 0.24, suggesting that its stock price is 76% less volatile than the S&P 500.

Institutional & Insider Ownership

87.4% of Macy’s shares are held by institutional investors. Comparatively, 90.0% of Groupon shares are held by institutional investors. 1.1% of Macy’s shares are held by company insiders. Comparatively, 36.6% of Groupon shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Macy’s and Groupon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Macy’s	3.29%	13.21%	3.83%
Groupon	-25.26%	N/A	-20.28%

Summary

Macy’s beats Groupon on 11 of the 15 factors compared between the two stocks.

About Macy’s

Macy’s, Inc. engages in the retail of apparel, accessories, cosmetics, home furnishings, and other consumer goods. The firm’s brands include Macy’s, Bloomingdale’s, and Bluemercury. It offers men’s, women’s, and children’s apparel, women’s accessories, intimate apparel, shoes, cosmetics, fragrances, as well as home and miscellaneous products. The company was founded by Rowland H. Macy in 1858 and is headquartered in New York, NY.

About Groupon

Groupon, Inc., together with its subsidiaries, operates a marketplace that connects consumers to merchants. It operates in two segments, North America and International. The company sells goods or services on behalf of third-party merchants. It serves customers through its mobile applications and websites. The company was formerly known as ThePoint.com, Inc. and changed its name to Groupon, Inc. in October 2008. Groupon, Inc. was incorporated in 2008 and is headquartered in Chicago, Illinois.