Tilly’s (NYSE:TLYS) and Zalando (OTCMKTS:ZLNDY) are both prominent players in the retail and wholesale sectors, yet they operate under different business models. This analysis compares the two companies based on several key factors: profitability, earnings, valuation, analyst recommendations, risk, and institutional ownership.
Profitability and Financial Performance
When examining the financial health of both companies, net margins, return on equity, and return on assets are crucial indicators. Zalando, operating primarily as an online fashion platform, has reported higher revenue and earnings compared to Tilly’s. This performance is significant given Zalando’s broader market reach across Europe.
On the other hand, Tilly’s, which specializes in casual apparel and accessories, is currently trading at a lower price-to-earnings ratio than Zalando. This suggests that Tilly’s may represent a more affordable investment opportunity at this moment, potentially attracting value-focused investors.
Analyst Ratings and Future Outlook
According to MarketBeat, Tilly’s has garnered a consensus target price of $2.25, indicating a potential upside of 64.23%. This positive outlook from equities research analysts highlights a belief that Tilly’s may outperform Zalando in future performance.
The breakdown of recent recommendations shows a more favorable sentiment towards Tilly’s, suggesting that investors may see more growth potential in this company compared to its competitor.
In terms of risk, Tilly’s has a beta of 1.44, which means its share price is 44% more volatile than the S&P 500. Zalando’s beta stands at 1.57, indicating a share price volatility of 57% compared to the same index. This higher beta suggests that Zalando may be riskier for investors.
Regarding ownership, institutional investors hold 76.4% of Tilly’s shares, while insiders own 2.8%. Strong institutional ownership often reflects confidence in a company’s long-term success, which may be a positive sign for Tilly’s investors.
In summary, while Zalando outperforms Tilly’s in 12 of the 15 factors assessed, the potential for higher returns in Tilly’s stock may appeal to certain investors.
About Tilly’s: Founded in 1982 by Hezy Shaked and Tilly Levine, Tilly’s, Inc. is based in Irvine, California. The company operates retail stores that feature casual apparel, footwear, and accessories located in various shopping environments, including malls and street-front locations.
About Zalando: Established in 2008 and headquartered in Berlin, Germany, Zalando SE focuses on an online platform for fashion and lifestyle products. The company operates through multiple segments, providing a diverse range of products including shoes and beauty items, with the allure of free delivery and returns.
As investors evaluate their options in the retail sector, the contrasting profiles of Tilly’s and Zalando present a compelling case for consideration, each offering unique advantages and challenges.
