Contrasting Carter’s (NYSE:CRI) and Under Armour (NYSE:UA)

Carter’s (NYSE:CRI) and Under Armour (NYSE:UA) are both small-cap consumer discretionary companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, earnings, risk, institutional ownership, dividends and valuation.

Insider & Institutional Ownership

36.3% of Under Armour shares are owned by institutional investors. 3.2% of Carter’s shares are owned by company insiders. Comparatively, 15.6% of Under Armour shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Carter’s has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500. Comparatively, Under Armour has a beta of 1.53, indicating that its share price is 53% more volatile than the S&P 500.

Profitability

This table compares Carter’s and Under Armour’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carter’s	6.55%	12.78%	4.67%
Under Armour	-9.99%	4.04%	1.37%

Analyst Ratings

This is a summary of current ratings for Carter’s and Under Armour, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carter’s	1	4	3	2	2.60
Under Armour	2	1	0	0	1.33

Carter’s currently has a consensus price target of $39.00, indicating a potential upside of 15.99%. Under Armour has a consensus price target of $5.50, indicating a potential upside of 15.42%. Given Carter’s’ stronger consensus rating and higher possible upside, equities analysts clearly believe Carter’s is more favorable than Under Armour.

Earnings & Valuation

This table compares Carter’s and Under Armour”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carter’s	$2.90 billion	0.43	$91.80 million	$5.34	6.30
Under Armour	$4.93 billion	0.42	-$495.64 million	($1.15)	-4.14

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

Summary

Carter’s beats Under Armour on 11 of the 15 factors compared between the two stocks.

About Carter’s

Carter’s, Inc. engages in the business of brand marketing of young children’s apparel. It operates through the following segments: the United States (US) Retail, US Wholesale, and International. The US Retail segment includes selling products through retail stores and ecommerce websites. The US Wholesale segment focuses on wholesale partners. The International segment is involved in selling in retail stores and ecommerce websites in Canada and Mexico, and to international wholesale customers and licensees. The company was founded by William Carter in 1865 and is headquartered in Atlanta, GA.

About Under Armour

Under Armour, Inc., together with its subsidiaries, develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth. The company provides its apparel in compression, fitted, and loose fit types. It also offers footwear products for running, training, basketball, cleated sports, recovery, and outdoor applications. In addition, the company provides accessories, which include gloves, bags, headwear, and sports masks; and digital subscription, advertising, and other digital business services. It primarily offers its products under the UNDER ARMOUR, HEATGEAR, COLDGEAR, HOVR, UA, PROTECT THIS HOUSE, I WILL, UA Logo, ARMOUR FLEECE, and ARMOUR BRA brands. The company sells its products through wholesale channels, including national and regional sporting goods chains, independent and specialty retailers, department store chains, mono-branded Under Armour retail stores, institutional athletic departments, and leagues and teams, as well as independent distributors; and directly to consumers through a network of 439 Brand and Factory House stores, as well as through e-commerce websites. It operates in the United States, Canada, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. Under Armour, Inc. was incorporated in 1996 and is headquartered in Baltimore, Maryland.