Analyzing ARKO (NASDAQ:ARKO) and Tilly’s (NYSE:TLYS)

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

Profitability

This table compares Tilly’s and ARKO’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tilly’s	0.34%	2.37%	0.61%
ARKO	0.14%	2.87%	0.34%

Earnings & Valuation

This table compares Tilly’s and ARKO”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tilly’s	$553.59 million	0.23	-$17.45 million	$0.06	69.42
ARKO	$8.30 billion	0.06	$22.74 million	$0.05	84.80

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

Insider and Institutional Ownership

76.4% of Tilly’s shares are held by institutional investors. Comparatively, 78.3% of ARKO shares are held by institutional investors. 26.4% of Tilly’s shares are held by insiders. Comparatively, 21.9% of ARKO shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Tilly’s has a beta of 0.09, meaning that its share price is 91% less volatile than the S&P 500. Comparatively, ARKO has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Tilly’s and ARKO, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tilly’s	0	3	0	0	2.00
ARKO	2	0	1	0	1.67

Tilly’s presently has a consensus target price of $5.50, indicating a potential upside of 32.05%. ARKO has a consensus target price of $14.50, indicating a potential upside of 241.98%. Given ARKO’s higher possible upside, analysts plainly believe ARKO is more favorable than Tilly’s.

Summary

ARKO beats Tilly’s on 8 of the 14 factors compared between the two stocks.

About Tilly’s

Tilly’s, Inc. is a specialty retailer focused on apparel, accessories and footwear for teens and young adults. The company offers a broad selection of products from national, emerging and exclusive brands across categories including clothing, denim, shoes, activewear, swimwear, accessories and lifestyle merchandise. Founded in 1982, Tilly’s operates an omnichannel retail business through its network of stores and e-commerce platform. Its stores are generally located in shopping centers and malls, and are designed to serve customers interested in action sports, contemporary fashion, music and youth-oriented culture.

About ARKO

ARKO Corp. is a U.S. convenience-store operator and fuel distributor. Through its subsidiary GPM Investments, the company runs convenience stores that sell fuel, food, beverages, tobacco products and other everyday goods, as well as offering services such as prepared food and loyalty programs. ARKO’s stores operate under a range of banners, including fas mart, E-Z Mart, Scotchman and Village Pantry. The company also distributes fuel to independently operated locations and serves commercial customers through fuel and related services.