Tailored Brands, Inc. (NYSE:TLRD) shares are up more than 8.06% this year and recently increased 0.21% or $0.05 to settle at $23.59. Blue Apron Holdings, Inc. (NYSE:APRN), on the other hand, is down -54.34% year to date as of 09/11/2018. It currently trades at $1.84 and has returned -6.60% during the past week.
Tailored Brands, Inc. (NYSE:TLRD) and Blue Apron Holdings, Inc. (NYSE:APRN) are the two most active stocks in the Apparel Stores industry based on today’s trading volumes. The market is clearly enthusiastic about both these stocks, but which is the better investment? To answer this, we will compare the two companies based on the strength of their growth, profitability, risk, returns, valuation, analyst recommendations, and insider trends.Growth
The ability to grow earnings at a compound rate over time is a crucial determinant of investment value. Analysts expect TLRD to grow earnings at a 8.30% annual rate over the next 5 years.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. TLRD’s ROI is 14.00% while APRN has a ROI of -54.10%. The interpretation is that TLRD’s business generates a higher return on investment than APRN’s.Cash Flow
The value of a stock is simply the present value of its future free cash flows. TLRD’s free cash flow (“FCF”) per share for the trailing twelve months was +1.96. Comparatively, APRN’s free cash flow per share was -0.12. On a percent-of-sales basis, TLRD’s free cash flow was 2.95% while APRN converted -0% of its revenues into cash flow. This means that, for a given level of sales, TLRD is able to generate more free cash flow for investors.Liquidity and Financial Risk
Balance sheet risk is one of the biggest factors to consider before investing. TLRD has a current ratio of 2.00 compared to 2.70 for APRN. This means that APRN can more easily cover its most immediate liabilities over the next twelve months.Valuation
TLRD trades at a forward P/E of 8.12, and a P/S of 0.35, compared to a P/B of 2.09, and a P/S of 0.45 for APRN. 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. TLRD is currently priced at a -31.62% to its one-year price target of 34.50. Comparatively, APRN is -32.1% relative to its price target of 2.71. This suggests that APRN is the better investment over the next year.
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. TLRD has a short ratio of 7.11 compared to a short interest of 5.57 for APRN. This implies that the market is currently less bearish on the outlook for APRN.Summary
Tailored Brands, Inc. (NYSE:TLRD) beats Blue Apron Holdings, Inc. (NYSE:APRN) on a total of 7 of the 14 factors compared between the two stocks. TLRD is growing fastly, generates a higher return on investment, has higher cash flow per share and has a higher cash conversion rate. In terms of valuation, TLRD is the cheaper of the two stocks on book value and sales basis, Finally, CSLT has better sentiment signals based on short interest.