Contrasting Bath & Body Works (NYSE:BBWI) and Sally Beauty (NYSE:SBH)

Sally Beauty (NYSE:SBH) and Bath & Body Works (NYSE:BBWI) are both retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, profitability, valuation and risk.

Institutional and Insider Ownership

95.1% of Bath & Body Works shares are owned by institutional investors. 1.6% of Sally Beauty 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 large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Sally Beauty has a beta of 1.55, meaning that its share price is 55% more volatile than the S&P 500. Comparatively, Bath & Body Works has a beta of 1.83, meaning that its share price is 83% more volatile than the S&P 500.

Profitability

This table compares Sally Beauty and Bath & Body Works’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sally Beauty	4.73%	30.35%	6.68%
Bath & Body Works	12.43%	-44.03%	14.45%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Sally Beauty and Bath & Body Works, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sally Beauty	1	2	3	0	2.33
Bath & Body Works	1	5	11	0	2.59

Sally Beauty currently has a consensus price target of $12.70, suggesting a potential upside of 36.34%. Bath & Body Works has a consensus price target of $43.63, suggesting a potential upside of 8.17%. Given Sally Beauty’s higher probable upside, equities analysts plainly believe Sally Beauty is more favorable than Bath & Body Works.

Earnings & Valuation

This table compares Sally Beauty 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
Sally Beauty	$3.72 billion	0.26	$153.41 million	$1.67	5.58
Bath & Body Works	$7.43 billion	1.18	$878.00 million	$4.10	9.84

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

Summary

Bath & Body Works beats Sally Beauty on 11 of the 14 factors compared between the two stocks.

About Sally Beauty

Sally Beauty Holdings, Inc. operates as a specialty retailer and distributor of professional beauty supplies. The company operates through two segments, Sally Beauty Supply and Beauty Systems Group. The Sally Beauty Supply segment offers beauty products, including hair color and care products, skin and nail care products, styling tools, and other beauty products for retail customers, salons, and salon professionals. This segment also provides products under Wella and L'Oreal brands. The Beauty Systems Group segment offers professional beauty products, such as hair color and care products, skin and nail care products, styling tools, and other beauty items directly to salons and salon professionals through its professional-only stores, e-commerce platforms, and sales force, as well as through franchised stores under the Armstrong McCall store name. This segment also sells products under Paul Mitchell and Wella brands. It operates stores and franchised units in the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain, and Germany. The company distributes its products through full-service/exclusive distributors and open-line distributors. Sally Beauty Holdings, Inc. was founded in 1964 and is headquartered in Denton, Texas.

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.