JAKKS Pacific (NASDAQ:JAKK – Get Free Report) and Smith & Wesson Brands (NASDAQ:SWBI – Get Free Report) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, valuation and institutional ownership.
Institutional and Insider Ownership
44.4% of JAKKS Pacific shares are held by institutional investors. Comparatively, 59.3% of Smith & Wesson Brands shares are held by institutional investors. 4.2% of JAKKS Pacific shares are held by insiders. Comparatively, 2.3% of Smith & Wesson Brands shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Dividends
JAKKS Pacific pays an annual dividend of $1.00 per share and has a dividend yield of 3.9%. Smith & Wesson Brands pays an annual dividend of $0.52 per share and has a dividend yield of 3.6%. JAKKS Pacific pays out 71.9% of its earnings in the form of a dividend. Smith & Wesson Brands pays out 130.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Smith & Wesson Brands has increased its dividend for 4 consecutive years. JAKKS Pacific is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk & Volatility
Analyst Ratings
This is a breakdown of current ratings and target prices for JAKKS Pacific and Smith & Wesson Brands, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| JAKKS Pacific | 0 | 2 | 0 | 0 | 2.00 |
| Smith & Wesson Brands | 0 | 2 | 1 | 0 | 2.33 |
Smith & Wesson Brands has a consensus price target of $16.50, suggesting a potential upside of 15.14%. Given Smith & Wesson Brands’ stronger consensus rating and higher possible upside, analysts clearly believe Smith & Wesson Brands is more favorable than JAKKS Pacific.
Profitability
This table compares JAKKS Pacific and Smith & Wesson Brands’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| JAKKS Pacific | 2.77% | 4.33% | 2.42% |
| Smith & Wesson Brands | 3.53% | 5.01% | 3.41% |
Earnings & Valuation
This table compares JAKKS Pacific and Smith & Wesson Brands”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| JAKKS Pacific | $570.67 million | 0.52 | $9.87 million | $1.39 | 18.49 |
| Smith & Wesson Brands | $523.84 million | 1.23 | $18.48 million | $0.40 | 35.82 |
Smith & Wesson Brands has lower revenue, but higher earnings than JAKKS Pacific. JAKKS Pacific is trading at a lower price-to-earnings ratio than Smith & Wesson Brands, indicating that it is currently the more affordable of the two stocks.
Summary
Smith & Wesson Brands beats JAKKS Pacific on 11 of the 17 factors compared between the two stocks.
About JAKKS Pacific
JAKKS Pacific, Inc. designs, produces, markets, sells, and distributes toys and related products, electronic products, and other consumer products worldwide. It operates through two segments, Toys/Consumer Products and Costumes. The company offers action figures and accessories, such as licensed characters; toy vehicles and accessories; dolls and accessories, including small, large, fashion, and baby dolls based on licenses, as well as infant and pre-school products; private label products; and foot-to-floor ride-on products. The company also provides role play, dress-up, pretend play, and novelty products for boys and girls based on brands and entertainment properties, as well as on its own proprietary brands; and indoor and outdoor kids' furniture, activity trays and tables, room décor, and seasonal and outdoor products. In addition, it offers Halloween and everyday costumes for various ages based on licensed and proprietary non-licensed brands, and related Halloween accessories; outdoor activity toys; junior sports toys, including hyper-charged balls, sport sets, and toy hoops; and board games. The company sells its products through in-house sales staff and independent sales representatives to toy and mass-market retail chain stores, department stores, office supply stores, drug and grocery store chains, club stores, value-oriented dollar stores, toy specialty stores, and wholesalers. JAKKS Pacific, Inc. was incorporated in 1995 and is headquartered in Santa Monica, California.
About Smith & Wesson Brands
Smith & Wesson Brands, Inc. is a holding company, which engages in the manufacture, design, and provision of firearms. Its portfolio includes handguns, long guns, handcuffs, suppressor, and other firearm-related products. The firm’s brands are Smith & Wesson, M&P, Thompson/Center Arms, and Gemtech. The company was founded by Horace Smith and Daniel Baird Wesson in 1852 and is headquartered in Maryville, TN.
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