Sequential Brands Group (SQBG) vs. Guess? (GES) Critical Analysis

Sequential Brands Group (NASDAQ: SQBG) and Guess? (NYSE:GES) are both small-cap consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitability, institutional ownership, dividends and analyst recommendations.

Profitability

This table compares Sequential Brands Group and Guess?’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sequential Brands Group 0.99% 1.29% 0.49%
Guess? 0.43% 4.14% 2.62%

Valuation and Earnings

This table compares Sequential Brands Group and Guess?’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sequential Brands Group $168.91 million 1.04 $101.48 million $0.02 139.57
Guess? $2.25 billion 0.61 $137.42 million $0.11 148.64

Guess? has higher revenue and earnings than Sequential Brands Group. Sequential Brands Group is trading at a lower price-to-earnings ratio than Guess?, indicating that it is currently the more affordable of the two stocks.

Dividends

Guess? pays an annual dividend of $0.90 per share and has a dividend yield of 5.5%. Sequential Brands Group does not pay a dividend. Guess? pays out 818.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Guess? has raised its dividend for 3 consecutive years.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Sequential Brands Group and Guess?, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sequential Brands Group 0 2 4 0 2.67
Guess? 1 5 3 0 2.22

Sequential Brands Group currently has a consensus target price of $8.20, suggesting a potential upside of 193.91%. Guess? has a consensus target price of $13.74, suggesting a potential downside of 15.97%. Given Sequential Brands Group’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Sequential Brands Group is more favorable than Guess?.

Risk & Volatility

Sequential Brands Group has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500. Comparatively, Guess? has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500.

Institutional and Insider Ownership

51.9% of Sequential Brands Group shares are owned by institutional investors. Comparatively, 79.5% of Guess? shares are owned by institutional investors. 27.3% of Sequential Brands Group shares are owned by company insiders. Comparatively, 29.6% of Guess? shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Guess? beats Sequential Brands Group on 10 of the 17 factors compared between the two stocks.

Sequential Brands Group Company Profile

Sequential Brands Group, Inc. owns a portfolio of consumer brands in the fashion, home, athletic and lifestyle categories. The Company’s portfolio of consumer brands includes Martha Stewart, Emeril Lagasse, Jessica Simpson, Joe’s Jeans, William Rast, Ellen Tracy, Revo, AND1 and Avia. The Company’s brands are licensed for a range of product categories, including apparel, footwear, eyewear, fashion accessories and home goods. The Company licenses brands to both wholesale and direct-to-retail licensees. The Company licenses the Martha Stewart brand to various licensees, including retailers, such as Macy’s, The Home Depot, PetSmart and Staples. The Jessica Simpson Collection is a signature lifestyle concept designed in collaboration with Jessica Simpson, which offers various product categories, including footwear, apparel, fragrance, fashion accessories, maternity apparel, girls clothing and a home line. The Avia brand offers running and activewear products.

Guess? Company Profile

Guess?, Inc. designs, markets, distributes and licenses a lifestyle collections of apparel and accessories for men, women and children. The Company operates through five segments: Americas Retail, Europe, Asia, Americas Wholesale and Licensing. The Americas Retail segment includes the Company’s retail and e-commerce operations in North and Central America and its retail operations in South America. The Europe segment includes the Company’s retail, e-commerce and wholesale operations in Europe and the Middle East. The Asia segment includes the Company’s retail, e-commerce and wholesale operations in Asia. The Asia segment includes the Company’s retail, e-commerce and wholesale operations in Asia. The Licensing segment includes the around the world licensing operations of the Company. Its apparel is marketed under various names, including GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, MARCIANO, Question Mark and Triangle Design, GUESS Kids, Baby GUESS, YES, G by GUESS and GUESS by MARCIANO.

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