Regis (NASDAQ:RGS – Get Free Report) and Gaotu Techedu (NYSE:GOTU – Get Free Report) are both small-cap consumer discretionary companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, profitability, valuation, institutional ownership and risk.
Institutional and Insider Ownership
31.5% of Regis shares are held by institutional investors. Comparatively, 48.4% of Gaotu Techedu shares are held by institutional investors. 8.0% of Regis shares are held by insiders. Comparatively, 44.9% of Gaotu Techedu shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Analyst Recommendations
This is a breakdown of current ratings and target prices for Regis and Gaotu Techedu, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Regis | 0 | 1 | 1 | 0 | 2.50 |
| Gaotu Techedu | 1 | 0 | 0 | 0 | 1.00 |
Regis presently has a consensus target price of $42.00, indicating a potential upside of 43.30%. Given Regis’ stronger consensus rating and higher possible upside, analysts plainly believe Regis is more favorable than Gaotu Techedu.
Profitability
This table compares Regis and Gaotu Techedu’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Regis | 3.09% | 4.10% | 1.36% |
| Gaotu Techedu | -5.00% | -26.89% | -5.73% |
Risk and Volatility
Regis has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500. Comparatively, Gaotu Techedu has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500.
Earnings & Valuation
This table compares Regis and Gaotu Techedu”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Regis | $224.49 million | 0.33 | $6.94 million | $2.42 | 12.11 |
| Gaotu Techedu | $878.98 million | 0.73 | -$46.23 million | ($0.21) | -12.79 |
Regis has higher earnings, but lower revenue than Gaotu Techedu. Gaotu Techedu is trading at a lower price-to-earnings ratio than Regis, indicating that it is currently the more affordable of the two stocks.
Summary
Regis beats Gaotu Techedu on 10 of the 14 factors compared between the two stocks.
About Regis
Regis Corporation owns, operates, and franchises hairstyling and hair care salons in the United States, the United Kingdom, Canada, and Puerto Rico. The company operates in two segments, Franchise Salons and Company-owned Salons. Its salons provide haircutting and styling, including shampooing and conditioning; hair coloring; and other services, as well as sells various hair care and other beauty products. The company also offers OpenSalon Pro, a back-office salon management system; and Opensalon mobile application. Regis Corporation operates its salons primarily under the SmartStyle, Supercuts, Cost Cutters, Roosters, and First Choice Haircutters names. As of June 30, 2021, the company operated 5,917 salons, such as 5,563 franchised salons, 276 company-owned salons, and 78 non-controlling ownership salons. It also operates accredited cosmetology schools. The company was founded in 1922 and is headquartered in Minneapolis, Minnesota.
About Gaotu Techedu
Gaotu Techedu Inc., a technology-driven education company, provides learning services, educational content, and digitalized learning products in the People's Republic of China. The company offers traditional online academic subject tutoring services that covers academic subjects, such as mathematics, English, Chinese, physics, chemistry, biology, history, geography, and political science for students; non-academic tutoring services; personal interest courses comprising chess learning, family relationships and education, humanities, and science courses; and professional courses primarily for college students and adults preparing for professional qualification exams, such as teacher's qualification, Chartered Financial Analyst designation, Certified Public Accountant designation, and other exams. It also offers admission courses for admission tests and interviews, including national-post graduate entrance examination, civil service examinations, and others; foreign language courses; overseas study related services; and courses to prepare and pass certain language exams for study abroad, such as IELTS and TOEFL. In addition, the company designs and develops course outlines, interactive courseware, practice exercises, and lesson notes; publishes reference books comprising Chinese dictionary, dictionary of idioms, and past exam questions for the college entrance examination; and develops, expands, and upgrades education-centric digital products and solutions, as well as learning apps. Further, it offers books and digitalized auxiliary learning tools, such as smart devices and translation pens; and online tutoring services. The company was formerly known as GSX Techedu Inc. and changed its name to Gaotu Techedu Inc. in June 2021. Gaotu Techedu Inc. was incorporated in 2014 and is headquartered in Beijing, China.
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