Bath & Body Works (NYSE:BBWI) & Lowe’s Companies (NYSE:LOW) Critical Review

Lowe’s Companies (NYSE:LOW) and Bath & Body Works (NYSE:BBWI) are both consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, analyst recommendations, risk, profitability and earnings.

Valuation & Earnings

This table compares Lowe’s Companies and Bath & Body Works”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lowe’s Companies	$90.43 billion	1.14	$6.65 billion	$11.83	15.54
Bath & Body Works	$7.29 billion	0.50	$649.00 million	$3.84	4.68

Lowe’s Companies has higher revenue and earnings than Bath & Body Works. Bath & Body Works is trading at a lower price-to-earnings ratio than Lowe’s Companies, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Lowe’s Companies has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500. Comparatively, Bath & Body Works has a beta of 1.4, suggesting that its share price is 40% more volatile than the S&P 500.

Dividends

Lowe’s Companies pays an annual dividend of $5.00 per share and has a dividend yield of 2.7%. Bath & Body Works pays an annual dividend of $0.80 per share and has a dividend yield of 4.5%. Lowe’s Companies pays out 42.3% of its earnings in the form of a dividend. Bath & Body Works pays out 20.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Lowe’s Companies has raised its dividend for 53 consecutive years. Bath & Body Works is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Lowe’s Companies and Bath & Body Works’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lowe’s Companies	7.34%	-75.67%	12.82%
Bath & Body Works	10.83%	-53.48%	13.40%

Institutional & Insider Ownership

74.1% of Lowe’s Companies shares are owned by institutional investors. Comparatively, 95.1% of Bath & Body Works shares are owned by institutional investors. 0.3% of Lowe’s Companies shares are owned by company insiders. Comparatively, 0.3% of Bath & Body Works shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for Lowe’s Companies and Bath & Body Works, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lowe’s Companies	2	12	22	0	2.56
Bath & Body Works	1	15	4	0	2.15

Lowe’s Companies currently has a consensus target price of $254.29, indicating a potential upside of 38.36%. Bath & Body Works has a consensus target price of $22.13, indicating a potential upside of 23.12%. Given Lowe’s Companies’ stronger consensus rating and higher possible upside, research analysts plainly believe Lowe’s Companies is more favorable than Bath & Body Works.

Summary

Lowe’s Companies beats Bath & Body Works on 9 of the 17 factors compared between the two stocks.

About Lowe’s Companies

Lowe’s Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States. The company offers a line of products for construction, maintenance, repair, remodeling, and decorating. It also provides home improvement products, such as appliances, seasonal and outdoor living, lawn and garden, lumber, kitchens and bath, tools, paint, millwork, hardware, flooring, rough plumbing, building materials, décor, and electrical. In addition, the company offers installation services through independent contractors in various product categories; and extended protection plans and repair services. It sells its national brand-name merchandise and private brand products to professional customers, homeowners, renters, businesses, and government. The company also sells its products through Lowes.com website; and through mobile applications. Lowe’s Companies, Inc. was founded in 1921 and is based in Mooresville, North Carolina.

About Bath & Body Works

Bath & Body Works, Inc. is a specialty retailers and home to America’s Favorite Fragrances, offering a breadth of exclusive fragrances for the body and home, including the selling collections for fine fragrance mist, body lotion and body cream, 3-wick candles, home fragrance diffusers and liquid hand soap. The company was founded by Leslie Herbert Wexner in 1963 and is headquartered in Columbus, OH.