Financial Survey: Children’s Place (NASDAQ:PLCE) versus GAP (NYSE:GAP)

GAP (NYSE:GAP) and Children’s Place (NASDAQ:PLCE) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.

Earnings & Valuation

This table compares GAP and Children’s Place”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GAP	$15.17 billion	0.54	$502.00 million	($27.20)	-0.80
Children’s Place	$1.60 billion	0.11	-$154.54 million	($12.71)	-1.08

GAP has higher revenue and earnings than Children’s Place. Children’s Place is trading at a lower price-to-earnings ratio than GAP, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and price targets for GAP and Children’s Place, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GAP	0	3	0	0	2.00
Children’s Place	0	4	0	0	2.00

GAP presently has a consensus target price of $27.00, suggesting a potential upside of 23.85%. Children’s Place has a consensus target price of $16.00, suggesting a potential upside of 16.62%. Given GAP’s higher possible upside, analysts plainly believe GAP is more favorable than Children’s Place.

Insider and Institutional Ownership

58.8% of GAP shares are held by institutional investors. 31.0% of GAP shares are held by insiders. Comparatively, 3.7% of Children’s Place shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility and Risk

GAP has a beta of 2.35, suggesting that its stock price is 135% more volatile than the S&P 500. Comparatively, Children’s Place has a beta of 2.23, suggesting that its stock price is 123% more volatile than the S&P 500.

Profitability

This table compares GAP and Children’s Place’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GAP	5.05%	28.89%	6.92%
Children’s Place	-10.52%	-4,732.98%	-7.12%

Summary

GAP beats Children’s Place on 11 of the 12 factors compared between the two stocks.

About GAP

The Gap, Inc. operates as an apparel retail company. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. Its products include adult apparel and accessories; and fitness and lifestyle products for use in yoga, training, sports, travel, and everyday activities for women and girls. The company offers its products through company-operated stores, franchise stores, websites, and third-party arrangements. It has franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta stores and websites in Asia, Europe, Latin America, the Middle East, and Africa. The Gap, Inc. was incorporated in 1969 and is headquartered in San Francisco, California.

About Children’s Place

The Children's Place, Inc. operates as a children's specialty apparel retailer in North America. It operates through two segments, The Children's Place U.S. and The Children's Place International. The company offers apparel, footwear, accessories, and other items for children and tweens; and designs, contracts to manufacture, and sells merchandise under the proprietary The Children's Place, Place, Baby Place, Gymboree, Sugar & Jade, and PJ Place brand names. It operates through online stores at childrensplace.com, gymboree.com, sugarandjade.com, and www.pjplace.com; international franchise partners; and retail stores in the United States, Canada, and Puerto Rico. The company was formerly known as The Children's Place Retail Stores, Inc. and changed its name to The Children's Place, Inc. in June 2014. The Children's Place, Inc. was founded in 1969 and is headquartered in Secaucus, New Jersey.