Comparing Leslie’s (NASDAQ:LESL) and Grocery Outlet (NASDAQ:GO)

Leslie’s (NASDAQ:LESL) and Grocery Outlet (NASDAQ:GO) are both small-cap consumer staples companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, risk, profitability, valuation, analyst recommendations and earnings.

Valuation & Earnings

This table compares Leslie’s and Grocery Outlet”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Leslie’s	$1.24 billion	0.03	-$236.97 million	($29.69)	-0.12
Grocery Outlet	$4.69 billion	0.17	-$224.91 million	($3.88)	-2.12

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

Profitability

This table compares Leslie’s and Grocery Outlet’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Leslie’s	-22.64%	N/A	-8.22%
Grocery Outlet	-8.08%	5.69%	1.86%

Analyst Ratings

This is a breakdown of current recommendations for Leslie’s and Grocery Outlet, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Leslie’s	2	4	1	0	1.86
Grocery Outlet	2	11	0	0	1.85

Leslie’s currently has a consensus target price of $2.85, indicating a potential downside of 20.17%. Grocery Outlet has a consensus target price of $10.32, indicating a potential upside of 25.68%. Given Grocery Outlet’s higher possible upside, analysts clearly believe Grocery Outlet is more favorable than Leslie’s.

Institutional & Insider Ownership

99.9% of Grocery Outlet shares are owned by institutional investors. 0.5% of Leslie’s shares are owned by insiders. Comparatively, 4.5% of Grocery Outlet shares are owned by 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.

Volatility and Risk

Leslie’s has a beta of 1.53, meaning that its stock price is 53% more volatile than the S&P 500. Comparatively, Grocery Outlet has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500.

Summary

Grocery Outlet beats Leslie’s on 10 of the 14 factors compared between the two stocks.

About Leslie’s

Leslie’s, Inc. operates as a direct-to-consumer pool and spa care brand in the United States. The company markets and sells pool and spa supplies and related products and services. It also offers various pool and spa maintenance items, such as chemicals, equipment and parts, cleaning and maintenance equipment, safety, recreational, and fitness related products. In addition, the company provides installation and repair services for pool and spa equipment. It also sells its products through e-commerce websites and third-party marketplaces. The company offers complimentary, commercial-grade in-store, water testing, and analysis services. It serves the residential, professional, and commercial consumers. Leslie’s, Inc. was founded in 1963 and is based in Phoenix, Arizona.

About Grocery Outlet

Grocery Outlet Holding Corp. operates as a retailer of consumables and fresh products sold through independently operated stores in the United States. Its stores offer products in various categories, such as dairy and deli, produce, floral, fresh meat, seafood products, grocery, general merchandise, health and beauty care, frozen food, beer and wine, and ethnic products. The company was founded in 1946 and is headquartered in Emeryville, California.