Reviewing Williams-Sonoma (NYSE:WSM) & Bath & Body Works (NYSE:BBWI)

Bath & Body Works (NYSE:BBWI) and Williams-Sonoma (NYSE:WSM) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.

Volatility & Risk

Bath & Body Works has a beta of 1.4, suggesting that its share price is 40% more volatile than the S&P 500. Comparatively, Williams-Sonoma has a beta of 1.48, suggesting that its share price is 48% more volatile than the S&P 500.

Insider & Institutional Ownership

95.1% of Bath & Body Works shares are held by institutional investors. Comparatively, 99.3% of Williams-Sonoma shares are held by institutional investors. 0.3% of Bath & Body Works shares are held by insiders. Comparatively, 1.1% of Williams-Sonoma shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations for Bath & Body Works and Williams-Sonoma, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bath & Body Works	1	15	4	0	2.15
Williams-Sonoma	0	8	10	0	2.56

Bath & Body Works currently has a consensus target price of $22.13, suggesting a potential upside of 3.52%. Williams-Sonoma has a consensus target price of $247.94, suggesting a potential downside of 0.71%. Given Bath & Body Works’ higher probable upside, equities analysts clearly believe Bath & Body Works is more favorable than Williams-Sonoma.

Dividends

Bath & Body Works pays an annual dividend of $0.80 per share and has a dividend yield of 3.7%. Williams-Sonoma pays an annual dividend of $3.04 per share and has a dividend yield of 1.2%. Bath & Body Works pays out 20.8% of its earnings in the form of a dividend. Williams-Sonoma pays out 31.1% 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. Williams-Sonoma has increased its dividend for 20 consecutive years. Bath & Body Works is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Bath & Body Works and Williams-Sonoma’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bath & Body Works	10.83%	-53.48%	13.40%
Williams-Sonoma	14.73%	53.48%	20.50%

Earnings & Valuation

This table compares Bath & Body Works and Williams-Sonoma”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bath & Body Works	$7.29 billion	0.59	$649.00 million	$3.84	5.57
Williams-Sonoma	$7.81 billion	3.77	$1.09 billion	$9.77	25.56

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

Summary

Williams-Sonoma beats Bath & Body Works on 14 of the 17 factors compared between the two stocks.

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.

About Williams-Sonoma

Williams-Sonoma, Inc. operates as an omni-channel specialty retailer of various products for home. It offers cooking, dining, and entertaining products, such as cookware, tools, electrics, cutlery, tabletop and bar, outdoor, furniture, and a library of cookbooks under the Williams Sonoma Home brand, as well as home furnishings and decorative accessories under the Williams Sonoma lifestyle brand; and furniture, bedding, lighting, rugs, table essentials, and decorative accessories under the Pottery Barn brand. The company also provides home decor products under the West Elm brand; kids accessories under the Pottery Barn Kids brand; and an organic bedding to multi-purpose furniture under the Pottery Barn Teen brand. In addition, it offers made-to-order lighting, hardware, furniture, and home decors inspired by history under the Rejuvenation brand; personalized products and custom gifts under the Mark and Graham brand; and colorful and vintage-inspired heirloom products under the GreenRow, as well as operates a 3-D imaging and augmented reality platform for the home furnishings and décor industry under the Outward brand. The company markets its products through e-commerce websites, direct-mail catalogs, and retail stores. Williams-Sonoma, Inc. was founded in 1956 and is headquartered in San Francisco, California.