Earnings

A Side-by-side Analysis of Blue Apron Holdings, Inc. (APRN) and Pier 1 Imports, Inc. (PIR)

Blue Apron Holdings, Inc. (NYSE:APRN) and Pier 1 Imports, Inc. (NYSE:PIR) are the two most active stocks in the Specialty Retail, Other industry based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.

Profitability and Returns

Growth isn’t very attractive to investors if companies are sacrificing profitability and shareholder returns to achieve that growth. We will use Return on Investment (ROI), which control for differences in capital structure between the two companies, to measure profitability and return. APRN’s ROI is 62.30% while PIR has a ROI of 8.10%. The interpretation is that APRN’s business generates a higher return on investment than PIR’s.

Cash Flow 



The value of a stock is simply the present value of its future free cash flows. APRN’s free cash flow (“FCF”) per share for the trailing twelve months was -1.29. Comparatively, PIR’s free cash flow per share was +0.12. On a percent-of-sales basis, APRN’s free cash flow was -0% while PIR converted 0.56% of its revenues into cash flow. This means that, for a given level of sales, PIR is able to generate more free cash flow for investors.

Liquidity and Financial Risk

Liquidity and leverage ratios measure a company’s ability to meet short-term obligations and longer-term debts. APRN has a current ratio of 0.70 compared to 2.00 for PIR. This means that PIR can more easily cover its most immediate liabilities over the next twelve months.




Valuation

APRN trades at a forward P/S of 1.17, compared to a forward P/E of 8.55, a P/B of 1.21, and a P/S of 0.19 for PIR. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.

Analyst Price Targets and Opinions

A cheap stock isn’t a good investment if the stock is priced accurately. To get a sense of “value” we must compare the current price to some measure of intrinsic value such as a price target. APRN is currently priced at a -17.96% to its one-year price target of $6.68. Comparatively, PIR is -17.1% relative to its price target of $5.03. This suggests that APRN is the better investment over the next year.

The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.70 for APRN and 3.30 for PIR, which implies that analysts are more bullish on the outlook for PIR.

Risk and Volatility

Beta is a metric that investors frequently use to analyze a stock’s systematic risk. A beta above 1 implies above average market volatility. Conversely, a stock with a beta below 1 is seen as less risky than the overall market. PIR’s beta is 1.73.

Insider Activity and Investor Sentiment

Short interest is another tool that analysts use to gauge investor sentiment. It represents the percentage of a stock’s tradable shares that are being shorted. APRN has a short ratio of 2.61 compared to a short interest of 6.89 for PIR. This implies that the market is currently less bearish on the outlook for APRN.

Summary

Pier 1 Imports, Inc. (NYSE:PIR) beats Blue Apron Holdings, Inc. (NYSE:APRN) on a total of 4 of the 8 factors compared between the two stocks. PIR generates a higher return on investment, has a higher cash conversion rate and higher liquidity. Finally, EBAY has better sentiment signals based on short interest.

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